I just want to know what you guys think about opening two or more trades with the same currency.
For instance going long on E/U and long on E/J, or long E/U and short E/J
In the first example, aren’t you pretty much just doubling your trade, and in the second, aren’t you pretty much just cancelling them out?
I know that E/U and E/J (as an example) won’t always move together but I’ve noticed that around 80% of the time they do.
You’re absolutely correct. If you go long EUR/USD and EUR/JPY you are basically doing a double long the euro. If you go long EUR/USD and short EUR/JPY you’re basically cancelling out your euro exposure, leaving you effecitvely short USD/JPY.
These are things a lot of new traders get tripped up by and why it’s good to focus on one position at a time when you get started.
Thats why I’d like to try stocks out. They are all more or less independent. Ya, there are sectors, but I still think it would be better. I just don’t have startup capital required by law.
Stocks are most definitely not “more or less independent”. A large chunk of them are quite highly correlated to the overall market, and thus to each other.