How do you handle risk when trading a bunch of currency pairs at the same time?
Mitigate risk by trading non correlated pairs.
Ie; Don’t have longs on EurUsd, GbpUsd, AudUsd, or shorts on UsdJpy at the same time.
Lower risk by not having too many longs or shorts of the same currency. Ultimately smaller size will be the best form of lowering risk.
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Definitely this.
For me, there is no extra benefit at all in trading correlated pairs at the same time. Just extra headaches.
Nearly all pairs are either positive or negative correlated. It helps to know which. And to know from current information as they can change, also.
But the short answer is that it’s very hard for most traders to benefit more by trading many pairs at one time.
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I think this is right. People often feel that they’re somehow “spreading the risk” (by which they really mean “reducing the risk”) when they trade multiple pairs.
In theory, that could occasionally be correct (for example, if they traded both USD/CHF and EUR/USD at the same time and in the same direction they’d obviously be reducing their risk - at the cost of reducing their potential profit, too, but that example’s a real exception.
The reality, however, is that they’re actually much more likely to be increasing their risk than reducing it.
My own perspective is that it’s not easy to understand what makes people - especially comparative beginners - habitually trade multiple pairs simultaneously. I’ll perhaps sound blunt or even rude, but to be honest, it even makes me wonder whether they really know what they’re doing. 
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Most of the time tradng correlated pairs does not make sense. As pointed out above, it’s an increase in risk which was probably neither intended nor justified.
It’s not for new traders. But there might be situations when you’re prepared to take the risk of some “diversification” in long time-frame trading.
One is for example if you want to be long AUD, which appears to be strengthening but you can’t say exactly which AUD pair will give an entry opportunity first nor which will be the best performer. It might be justifiable to set orders on a range of AUD pairs and take the first one: perhaps you could even run with two or three AUD pairs until the market shows you which is performing best in your favour and then cut out those which are trailing.
The other occasion is when your initial trade is running well and is well into proft, so much that you have pyramided it at least once and moved your stops to the latest entry price. It might be justified at this point to consider whether to add trades on correlated pairs - as long as the total risk does not exceed the unrealised profits across the “portfolio”. This produces a high potential for walking out of the trades with almost no profit at all, so you could say it’s an advanced tactic.
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I keep an eye on how they’re correlated so I don’t accidentally double up on the same risk. If two pairs move the same way, I treat them like one trade and manage risk accordingly. That way, I avoid getting wrecked if the market moves against me.
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Yes, as well as the entire FX market, to some degree.
For example, a big news event will usually send ripples through the entire market regardless of the currency, which is another good reason not to trade multiple pairs, period. Unless you’ve accepted this risk.
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I treat it like juggling, if I start dropping balls, I slow down and focus on the important ones. I keep an eye on how much overall risk I’m taking and don’t let myself get greedy by opening too many trades at once. Quality over quantity, always.