Hi all,
i was thinking about some facts on open positions:
if i open a position on let’s say, for example EUR/USD, i am thinking about a different investment to diversify my portfolio.
Maybe some other pair but i can’t figure out a real connection.
I’m not talking about hedging or opposte positions because are pointless.
i’m thinking about something that i can rely on for balancing my position on a cross.
Sorry for the rubbish english.
Take care all traders
Diversification with forex pairs is a tricky thing. What happens all too often when people try to do it is they end up creating an entirely different exposure than they intended. For example, if you are long EUR/USD, then you go short GBP/USD you have created a long EUR/GBP exposure. And of course any time you trade any given currency in the same direction across multiple pairs (think long EUR/USD and short USD/JPY where you’d be double short the USD) you create extra exposure to that one currency. The only way to really avoid all that is to trade pairs which have no overlapping currencies among them.