After looking around this forum, it seems that there’s one bit of advice that I’ve come across repeatedly: pick one currency pair and stick to it.
While I can see the fundamentalist justification behind this argument (certainly, you cannot possibly account for all fundamentalist factors shaping the price of multiple currencies), how well does this suggestion hold up from the purely technical perspective?
At any given time, some currency pairs are bearish, while others are bullish. From this perspective, what are the flaws with spreading your risk and dealing with multiple currency pairs simultaneously, especially if you’re approaching them from a purely technical analysis perspective?
To me, it sounds like a very sound money management proposition. It is generally not recommended to risk more than 5% of your account per trade, which effectively limits you to placing one trade per currency pair (after all, if you’re placing multiple bets in the same market situation and betting on the same trend, you’re either going to lose them all or win them all, right?)
Using multiple currency pairs, I not only spread the risk, but am also able to put more of my money to use while still observing the 5% limit.
Thoughts? Remember, I’m approaching this purely from the perspective of technical analysis.
It is hedging without actually doing it on the same pair. (need two accounts to hedge on the same pair) but some people are trading it.
The problem, one could offset the other and in a flat market it is not worth the hassle. Gains could be small because one offsets the other and you have to be really on alert so you don’t miss the train.
Best advise: Try it on demo account and see if it is your “cup of tea”
