2% Risk on multiple trades with the same currency

Trading Discussion Risk Management Practices
1

Hi. I know that 2% risk on each of these at the same time would mean a 6% risk overall

EUR/AUD long

AUD/USD short

AUD/CAD short

but would it still be 6% if it looked like this:

EUR/AUD long

AUD/USD long

AUD/CAD short

or would this be 4% risk?

2

The focus on getting short AUD is the theme of the first series of trades. The long-established rule is, as you suggest, not to risk more than 2% per trade. But if you take multiple positions on the same theme, you have effectively broken your own rule - you’re risking 6% on what is effectively one trade.

In the second series, you’re still risking more than 2%. Not good.

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3

thank you. in the second series is it 4%? @tommor

4

Yes, it’s still could be a 6% risk because both sides of buying and selling AUD/USD could lose and win money depending on how price action moves, and where you set your S/L.
Hedge trading require three, not four currencies.
Here’s a great hedge trade set up:

USD/JPY long
EUR/USD long
EUR/JPY short.

On your pairs e.g :

EUR/AUD long
AUD/CAD long
EUR/CAD short.

Or
AUD/USD long
EUR/AUD long
EUR/USD short

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5

Thanks @steve369. I think that answers my question. I have lately received a lot of signals but have only take one trade per pair. I might split it in future and try 1% on trades with the same currency in it :slight_smile:

6

That would be actually better. Or either you can also scale down to make sure it does not go over beyond 2%

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7

I sometimes get drawn into setting multiple parallel orders on the same theme - for example if general market sentiment is rotating from risk-off to risk-on I might set three AUD buy orders and some NZD buys. This would be when they’re all equally good trend-following set-ups but I can’t distinguish which is going to move first or furthest. The tactic when they start to trigger is to stick with the best mover or two and cancel the remaining untriggered orders.

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