This is a rarely seen style of trading, even many experienced traders won’t have tried it.
The standard approach involves identifying a strong base currency and taking parallel positions in all the available pairs on the same base. Not intra-day. So if your analysis shows GBP as strong, you take parallel long positions in all the important GBP-based pairs plus a short in EUR/GBP.
The individual positions must be small as you want as many parallel positions open as possible. The stop-loss is a basket SL, so you close the entire basket of the aggregated loss reaches a certain % of account capital. Likewise with the TP.
On the upside, if your currency strength analysis is right you are going to win big. Identifying a strong currency is a lot easier and more objective than chart TA. With a basket of GBP longs you avoid the risk of selecting the wrong GBP-based pair to buy big into - its going to be annoying and damaging to buy GBP/CHF when you find a week later you should have bought GBP/JPY.
On the downside, if GBP turns suddenly bearish after some ghastly news, you’re going to take the aggregated loss. Another reason for very small positions. But barring well-flagged political and central bank events, such incidents will be rare: it would be very rare for GBP to rotate from strongest base to weakest base in 24 hours.
There are various permutations to this basic approach which I’m trialling and exploring.
Anyone used this style with any great success?
