You Lowkey Doubling Your Risk Without Even Knowing It?

Understanding how currency pairs vibe with each other can be the secret sauce between making bank and going broke. 💸

When you’re low-key trading multiple currency pairs at once, never forget to keep an eye on your RISK EXPOSURE. ⚠️

You might not realize you’re putting yourself on blast with the same market forces, doubling the drama.

For instance, trading AUD/USD and NZD/USD is basically like having twins—their moves are so in sync they’re like TikTok dance partners. 🎵

You might think you’re spreading the love by switching up pairs, but many pairs go with the flow in unison.

So, instead of leveling up your defense, you’re just stacking your risks! 🙈

This thing is known as overexposure. 😬

Let’s peep an example with two peas in a pod: EUR/USD and GBP/USD over a one-week span.

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

According to the data, with a swoon-worthy correlation coefficient of 0.94, these BFF pairs are super in-tune. 😍 EUR/USD is that peanut butter, and GBP/USD is totally jelly. 🥜🍓

Alrighty, you get it. They hold hands, vibe to “Kum Bay Yah”, and frolic in sync.

Both these pairs rock the U.S. dollar (USD) as the quote currency, making them dance to the beat of U.S. economic tunes. 💃

Currency Correlation Vibe #1: EUR/USD and GBP/USD

Consider what goes down if you go long (aka buy) on both EUR/USD and GBP/USD.

If the U.S. dollar suddenly levels up 'cause of some spicy economic news, both pairs might trip over each other, doubling your L’s.

Instead of diversifying, you just cranked up your exposure to the same risk factor, like how the U.S. dollar’s performance shapes up.

To show you that numbers don’t ghost you, check out their 4-hour charts. Notice how they both slipped in the same direction…down.

When it comes to risk, going strong with both EUR/USD and GBP/USD is basically double trouble.

Like, if you grabbed 1 lot of EUR/USD and copped 1 lot of GBP/USD, you might as well be buying 2 lots of EUR/USD, 'cause they’re gonna bounce together.

Putting it plainly, you’re BOOSTING your risk. Go for EUR/USD and GBP/USD, and it's double jeopardy if things go south! ☹️

It's not like you're getting two chances to mess up! If EUR/USD tanks and you get kicked out, GBP/USD might pull the same stunt (or vice versa).

You also wouldn’t wanna go for EUR/USD and sell GBP/USD at the same time, ‘cause if EUR/USD shoots up, then GBP/USD’s gonna rise too, and where does that leave you? 🤷‍♀️

If you think it'll always balance out perfectly like zero blues, that’s a miss. Different pip vibes mean they won't always move in the same lil' jump.

Volatility in currency pairs be flaky.

EUR/USD might bop 200 pips while GBP/USD only wiggles up 190 pips. In that sitch, your GBP/USD short’s gonna chomp down any EUR/USD gains. 😅

Now flip it—the EUR/USD cruises 190 pips, and GBP/USD takes a large 200 pip shot. You’d be stuck with a LOSS! 😬

Going long one pair and short on another who vibes together is pure backfire.

Besides coughing up cash for the spread twice, you cap your win ‘cause one pair nibbles the other pair’s payday.

Worse, you could take an L 'cause of different pip feels and fluxing trade range. Check the currency pairs glossary for more tea.

Currency Correlation Twist #2: EUR/USD and USD/CHF

Time to peep another example with EUR/USD and USD/CHF.

These combos might look like loners, but they low-key flex a strong negative correlation 'cause USD’s on top in one spot and on bottom in the other.

While GBP/USD was all +ve vibes, the EUR/USD throws serious shade at the USD/CHF.

If you clock this one-week vibe, it's a perfect -1.00. Can’t get any more ops than this! Forget Ben & Jerry’s; say hello to Tom and Jerry! 🐱🐭

EUR/USD and USD/CHF are like fierce foes, Bugs Bunny and Elmer Fudd. Going different ways all the time.

This love-hate play happens 'cause when USD flexes, it flexes hard on both EUR and CHF, but with an opposite twist in the vibes.

Picture bad vibes from the euro scene making the euro struggle against USD, causing EUR/USD to tank.

Peep the charts:

Taking opposite vibes on the two negatively synced pairs is like playing the same card with super-tight pairs.

Copping EUR/USD while dropping USD/CHF is like doubling down on one hype.

For instance, if you got 1 lot on EUR/USD and dissed 1 lot on USD/CHF, you’re really just rolling with 2 lots of EUR/USD, 'cause when EUR/USD bumps up, USD/CHF slides down, and you’re cashing in both ways.

But, heads-up, you’ve just amped up your risk exposure if you're doing this on your trading grind.

In our earlier example, if you’ve been hanging long on EUR/USD and ditching USD/CHF, if EUR/USD plunges like a stone, both your trades are prolly toast resulting in twin losses.

You could’ve ghosted that loss by choosing to go either long EUR/USD or short USD/CHF instead of both.

On the flip, buying (or dissing) both EUR/USD and USD/CHF at that same moment mostly leads to a big zilch 'cause you’re really just cancelling trades.

Since they dodge each other’s vibe like there’s beef, one side racks cash, while the other burns it.

You might stroll away with a tiny gain since one pair's numbers nibble the other’s earnings.

Or you could just end up down bad 'cause each pair’s got different pip feels and volatility streaks.

Peep our currency correlation gadget to quickly scope out which currency pairs move together and vibe out their connection levels. ✨