Hidden concentration: three tickets, one dollar bet
Posted: Mon Nov 02, 2026 1:47 pm
buying EURUSD and GBPUSD while selling USDCHF at the same time may look like three separate trades, but all three are largely a bet against the dollar. If the dollar strengthens, all three lose together.
A method to make this visible is to express each position in terms of exposure to individual currencies. Summing exposure shows the real bet: for example, a large net short dollar position, with smaller euro, pound and franc components.
A worked example: three positions, each risking 1 percent, may together carry close to 3 percent risk on a single dollar move. A risk plan that limits total exposure per currency, not just per trade, prevents this concentration.
Correlations change over time, so a rolling correlation table updated weekly can help. Pairs that usually move together can decouple around specific events.
Some traders cap the number of open positions involving any single currency at two.
How do you track exposure across correlated pairs?
A method to make this visible is to express each position in terms of exposure to individual currencies. Summing exposure shows the real bet: for example, a large net short dollar position, with smaller euro, pound and franc components.
A worked example: three positions, each risking 1 percent, may together carry close to 3 percent risk on a single dollar move. A risk plan that limits total exposure per currency, not just per trade, prevents this concentration.
Correlations change over time, so a rolling correlation table updated weekly can help. Pairs that usually move together can decouple around specific events.
Some traders cap the number of open positions involving any single currency at two.
How do you track exposure across correlated pairs?