When it comes to trading FOREX, everyone wants every advantage they can get. This advantage can come in customized indicators, auto-traders, or at times, trading multiple pairs at once. Trading multiple pairs can be done for a variety of reasons. You’ll see traders do it just to have a little extra income on top of the pair that they are usually trading, or you will see traders using multiple pairs that can foreshadow a similar pair. When it comes to the latter, knowing what pairs you’re looking for similar movements and what pairs to look at for opposite movements becomes very important.
Apiary Fund goes over a few of the pairs that correlate in the Beeline to Funding. These pairs are the some of the most commonly used and strongest correlated pairs. With the EUR/USD being the most commonly traded pair, it has some of the most volatility, and should as a result be a great leading pair to trade. If this is your primary pair you are trading, there are a few options you have for your second pair. The most common second pairs to trade are the GBP/USD, AUD/USD, and NZD/USD. One thing to notice here is that they have a set currency throughout and the position of that currency is the same. With this in mind, you can find pairs that act well together, just be aware that the strength of the connection will vary depending on how the other currency acts.
Other than EUR/USD pairs, there are other pairs that play nice. With the USD/JPY being a commonly traded pair, traders can see the USD/CHF fall nicely in line. For traders that like the added movement the AUD and NZD offer, the AUD/USD and NZD/USD can be a great set of pairs to trade. No matter what pair you’re trading, it is important to note which pair is the lead pair. This will vary with the day and time. Once you find the lead pair, placing the trades on the second pair is where many traders make their profits.
If you are more into reversal trades or other pairs, the GBP/USD is typically the go to currency pair. If you are trading this, reversals usually arise from the USD/CHF and the USD/JPY. Similar to the same direction pairs, you will notice a similar pair, but this time on the opposite side of the pair. The EUR/USD and USD/CHF along with USD/CAD and AUD/USD are also two commonly counteractive pairs. Once again, it is important to note which makes the move first to be able to trade the opposite side of the trend.
On top of these pairs, there are many more. The most important thing is making sure the pairs are on the same side for similar trades and opposite sides for opposing trades. You’ll be hard pressed to find situations where to pairs with the same base currency go opposite directions. They may not go the same, but it will be extremely difficult to go opposite directions. This isn’t to say it will never happen. Depending on what is going on with the other currency, it can happen but not often enough for Apiary Fund or other education companies to really talk about it. Just make sure you look at the position of the currencies and know who the leader of the set is. After that, trading should hopefully be easy going.