{"id":4398,"date":"2024-10-24T12:48:22","date_gmt":"2024-10-24T12:48:22","guid":{"rendered":"https:\/\/apex-aiexperts.com\/?p=4398"},"modified":"2025-04-28T14:12:47","modified_gmt":"2025-04-28T14:12:47","slug":"are-you-doubling-your-risk-without-knowing-it","status":"publish","type":"post","link":"https:\/\/apex-aiexperts.com\/es\/are-you-doubling-your-risk-without-knowing-it\/","title":{"rendered":"\u00bfEst\u00e1 duplicando su riesgo sin saberlo?"},"content":{"rendered":"

When you are simultaneously trading multiple currency pairs in your trading account, always make sure you\u2019re aware of your RISK EXPOSURE<\/strong>.<\/p>\n\n\n\n

For example, on most occasions, trading AUD\/USD and NZD\/USD are essentially like having two identical trades open because they usually have a positive correlation.<\/p>\n\n\n\n

You might believe that you\u2019re spreading or diversifying your risk by trading in different pairs, but many pairs tend to move in the same direction<\/strong>.<\/p>\n\n\n\n

\"RiskSo instead of reducing risk, you are magnifying your risk! Unknowingly, you are actually exposing yourself to MORE risk<\/em>.<\/p>\n\n\n\n

Esto se conoce como sobreexposici\u00f3n<\/strong>.<\/p>\n\n\n\n

Let\u2019s look at an example involving two highly correlated pairs within a one-week<\/strong> period: the EUR\/USD and GBP\/USD.<\/p>\n\n\n\n

EUR\/USD<\/th>USD\/JPY<\/th>USD\/CHF<\/th>GBP\/USD<\/th>USD\/CAD<\/th>AUD\/USD<\/th>NZD\/USD<\/th>EUR\/JPY<\/th>EUR\/GBP<\/th><\/tr>
1 week<\/td>-0.23<\/td>-1.00<\/td>0.94<\/td>-0.98<\/td>0.98<\/td>0.93<\/td>0.93<\/td>0.86<\/td><\/tr>
1 month<\/td>0.63<\/td>-0.98<\/td>0.13<\/td>-0.90<\/td>0.90<\/td>0.96<\/td>0.91<\/td>0.86<\/td><\/tr>
3 months<\/td>-0.62<\/td>-0.92<\/td>0.83<\/td>0.14<\/td>0.63<\/td>0.42<\/td>0.61<\/td>0.75<\/td><\/tr>
6 months<\/td>-0.62<\/td>-0.85<\/td>0.31<\/td>-0.35<\/td>0.61<\/td>0.65<\/td>0.28<\/td>0.71<\/td><\/tr>
1 year<\/td>-0.69<\/td>-0.98<\/td>0.88<\/td>-0.93<\/td>0.95<\/td>0.96<\/td>0.66<\/td>0.02<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Based on the table, with a sexy correlation coefficient of 0.94, there\u2019s obviously a high correlation in this particular pair. EUR\/USD is the peanut butter to GBP\/USD\u2018s jelly! Like oil and water. Like Ben & Jerry\u2019s!<\/p>\n\n\n\n

Okay, you get the picture. The point is that the two pairs hold hands, sing \u201cKum Bay Yah\u201d, and skip together.<\/p>\n\n\n\n

Currency Correlation Example #1: EUR\/USD and GBP\/USD<\/h2>\n\n\n\n

To prove to you that the numbers don\u2019t lie, here are their 4-hour charts. Notice how they both moved in the same direction\u2026down.<\/p>\n\n\n\n

\"Downtrend<\/a><\/figure>\n\n\n\n
\"Downtrend<\/a><\/figure>\n\n\n\n

Returning to the subject of risk, we can see that opening a position in both the EUR\/USD and the GBP\/USD is the same as doubling up<\/strong> on a position.<\/p>\n\n\n\n

For example, if you bought 1 lot of EUR\/USD and bought 1 lot of GBP\/USD, you\u2019re basically buying 2 lots<\/strong> of EUR\/USD, because both the EUR\/USD and GBP\/USD would move in the same direction anyway.<\/p>\n\n\n\n

In other words, you are INCREASING your risk. If you buy EUR\/USD and GBP\/USD, you don\u2019t get two chances to be wrong!<\/p>\n\n\n\n

All you get is one chance because if EUR\/USD falls and you get stopped out, GBP\/USD will most likely fall and stop you out also (or vice versa).<\/p>\n\n\n\n

You also wouldn\u2019t want to buy EUR\/USD and sell GBP\/USD at the same time because if EUR\/USD skyrockets, then GBP\/USD would probably skyrocket also and where does this leave you?<\/p>\n\n\n\n

If you think your profit or loss will always be zero, then you\u2019re wrong. EUR\/USD and GBP\/USD have different pip values and just because they are highly correlated doesn\u2019t mean they always move in the same exact pip range.<\/p>\n\n\n\n

Volatility within currency pairs is fickle.<\/strong><\/p>\n\n\n\n

EUR\/USD can skyrocket 200 pips, while GBP\/USD only goes up 190 pips. If this happens, the losses from your GBP\/USD trade (because you were short), will eat up most, if not all, of the gains from your EUR\/USD trade.<\/p>\n\n\n\n

Now let\u2019s imagine that EUR\/USD was the pair that moved up 190 pips, and GBP\/USD had the bigger move of 200 pips. You would\u2019ve definitely had a LOSS!<\/p>\n\n\n\n

Going long one currency pair and going short another currency pair that are highly correlated is extremely counterproductive.<\/strong><\/p>\n\n\n\n

More than paying for the spread twice, you minimize your gain because one pair eats into the other pair\u2019s profits.<\/p>\n\n\n\n

And even worse, you could end up losing due to the different pip values and ever-changing volatility of currency pairs.<\/p>\n\n\n\n

Currency Correlation Example #2: EUR\/USD and USD\/CHF<\/h2>\n\n\n\n

Let\u2019s take a look at another example. This time with the EUR\/USD and USD\/CHF.<\/p>\n\n\n\n

While we just saw a strong positive correlation with the GBP\/USD, the EUR\/USD has a very negative correlation with the USD\/CHF.<\/p>\n\n\n\n

If we look at its one-week correlation, it has a perfect correlation coefficient of -1.00. It doesn\u2019t get any more opposite than this folks! Instead of Ben & Jerry\u2019s, they\u2019re Tom and Jerry!<\/p>\n\n\n\n

\"Tom<\/figure>\n\n\n\n

EUR\/USD and USD\/CHF are like fire and water, Bugs Bunny and Elmer Fudd. Superman and kryptonite, Boston Celtics and Los Angeles Lakers, Manchester United, and Liverpool.<\/p>\n\n\n\n

These two pairs totally move in opposite directions. Check out the charts:<\/p>\n\n\n\n

\"EUR\/USD<\/a><\/figure>\n\n\n\n
\"USD\/CHF<\/a><\/figure>\n\n\n\n

Taking opposite<\/strong> positions on the two negatively correlated pairs would be similar to taking the same<\/strong> position on two highly positive correlated pairs.<\/p>\n\n\n\n

Buying EUR\/USD and selling USD\/CHF would be the same as doubling up on a position.<\/strong><\/p>\n\n\n\n

For example, if you bought 1 lot of EUR\/USD and sold 1 lot of USD\/CHF, you\u2019re basically buying 2 lots of EUR\/USD, because if EUR\/USD goes up, then USD\/CHF goes down, and you\u2019d be making money on both pairs.<\/p>\n\n\n\n

It\u2019s important to recognize though that you have INCREASED your risk exposure in your trading account if you do this.<\/p>\n\n\n\n

Returning to the example with you being long EUR\/USD and short USD\/CHF, if EUR\/USD actually dropped like a rock, most likely both of your trades would be stopped out resulting in two losses.<\/p>\n\n\n\n

You could\u2019ve minimized your loss by simply deciding to go long EUR\/USD OR<\/em> go short USD\/CHF, instead of doing both.<\/strong><\/p>\n\n\n\n

On the other hand, buying (or selling) both EUR\/USD and USD\/CHF at the same time is usually counterproductive since you\u2019re basically canceling<\/strong> each trade out.<\/p>\n\n\n\n

Because the two pairs move in opposite directions like they hate each other\u2019s guts, one side will make money, but the other will lose money.<\/p>\n\n\n\n

So you either end up with little gain because one pair eats into the other pair\u2019s profits.<\/p>\n\n\n\n

Or you could simply end up with a loss due to each pair\u2019s different pip values and volatility ranges.<\/p>","protected":false},"excerpt":{"rendered":"

When you are simultaneously trading multiple currency pairs in your trading account, always make sure you\u2019re aware of your RISK EXPOSURE. For example, on most occasions, trading AUD\/USD and NZD\/USD are essentially like having two identical trades open because they usually have a positive correlation. You might believe that you\u2019re spreading or diversifying your risk by trading […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[88,94],"tags":[],"class_list":["post-4398","post","type-post","status-publish","format-standard","hentry","category-undergraduate-senior","category-currency-correlations"],"_links":{"self":[{"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/posts\/4398","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/comments?post=4398"}],"version-history":[{"count":2,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/posts\/4398\/revisions"}],"predecessor-version":[{"id":5688,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/posts\/4398\/revisions\/5688"}],"wp:attachment":[{"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/media?parent=4398"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/categories?post=4398"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/apex-aiexperts.com\/es\/wp-json\/wp\/v2\/tags?post=4398"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}