It seems the consensus is to not wager more than 2% of your account. This seems pretty good to me but what if you are trading multiple pairs?
For example what about having 5 trades going at once:
2% on GBP/USD
2% on USD/NZD
2% on EUR/USD
2% on GBP/EUR
2% on USD/AUS
You’re risking 10% but its spread over 5 trades so its different from 10% on one trade.
Is this still risky?
Yes its still risky imo. Reduce the overall one time risk(10%) by reducing your risk per trade to say 1%, only 5% will be at stake. Or you can trade less, say 2-3 trades at any one time.
It also depends if you’re taking any trades that are correlated, that could give you more exposure without you realizing it.
+1 Good call.
Absolutely an issue.There are correlation issues in the pairs mentioned right off the bat.
i think it would be a better use of your time and money to focus on getting 5 entries of 1% on the same pair. It’s not about eliminating risk, it’s about making sure that you are getting good reward potential on the risk that you do take. Scaling into a position can leave you with a large position and huge profit potential, all made with low risk entries.
just remember that demand/supply of one currency will affect all pairs that contain that currency
Yup, here is a website if anyone wants to take a look at correlations. Forex Correlation - Mataf.net
This is even more risky than spreading 2% on several pairs. 5 entries on one pair is basically the same as 5% on 1 trade.