How To Trade Correlated Forex Pairs Without Losing Your A$$

0:00 This is a question that used to haunt me towards the beginning of my trading journey. And it was, "What do you do when two similar pairs have identical setups?" So, for example, I'm going to give you an example right here in which CAD JPY and ADJPY, they both got similar setups, right? They're both there at the support zones here on the daily and weekly charts. And I do think that price is in fact going to maybe attempt to bounce to the upside. So, they're two perfectly viable trades, right? I could take a buy right here at the support zone on odd JPY with a stop below and a target above or I can do a buy on KA JPY with a stop below and a target above. Now, I'm not one to predict because no one can in fact predict what's going to happen. But what I do know is that if price is right here at the zone, it gives me a good risk structure. But if I were to take both trades, it would then be doubling my risk and that's exposing me to currency correlation because if KJPY starts going down and breaking the

0:47 zone and goes to the stop-loss, ADJPY is likely to do the same thing. So here's the way I approach it. The simple way I do this is I just pick what I believe is the best trading opportunity. Now I know this is subjective and it requires experience and intuition and price action discretion and context and things such as that. I'm not one to hide that. However, what I do believe is that when you look at the charts, you can get a little bit more information to help you pick what the best setup is in fact is. So whenever I look at odd JPY prices come back into this zone and sure it's a nice little zone. Yes. However, when we go to KA JPY, it does look like we have more interactions here at this zone that make it just a little bit more clear than ADJPY. So, for example, prices bounced at resistance twice. It broke above it bounced as support and then again as support recently um about 2 weeks ago and now we're back here at

1:33 support again. I think CAD JPY is nicer just because the move we had off this zone was significantly longer outlived for about 300 pips. Whereas on odd JPY when price came here into this zone, yes, we had a bounce but relatively it just wasn't as far. It was 263 pips. it did go in and make a new high. However, I just do do think that KJPY is more likely to snap back to the upside given the variety of the market structure here and the fact that it's a little bit wider of a range. We've got more potential for upside. So, what I've done here is in the next trades group where I call my personal trades, I've just called a trade on KJPY. And so, what I'll do right now before explaining this is I'll actually go and just put this in the free Telegram channel for you guys. I'm just going to hit the screenshot to copy the link to the chat image and then I'll go here to Telegram and I'll post it right here. So, CAD JPY is ready

2:20 for buys. I have just entered a buy and called the exact trade in the MFX NT group, which is my Mission FX NIX Trades Discord group. So, right here. So, you can see right now what I've done is I've risked $25,000 right there. And then to go for a potential profit of 25,000. So basically what I'll do is when price gets to the zone, I just go to my MetaTrader 5 terminal on my mobile phone. I have an iPhone, so I just go to the MetaTrader 5 application. Then what I do is enter a buy there at the zone. I put a stop loss below the zone. And then what I'll do is I'll increase the lot size until that stop loss is reflective of whatever my risk tolerance is. Sometimes it's 25,000, sometimes it's 50K, sometimes it's 75K. It just depends on the quality of the trading opportunity. In this case, I felt comfortable risking 25K, not anything

3:06 higher. So I've risked 25K on this. After I do that and get the risk right, then I just drag the stop loss, the takeprofit to a 1:1 risk-reward ratio. So in this case here, what we have is we've got a trade setup and we've got a trading opportunity that we've selected based on what we thought was the better idea. Now if you think that 80 JPY is a better idea, or if you think GBP JPY is better, which it in fact has broken the zone from yesterday, then you may take any of those that you please, but a good rule of thumb is that you shouldn't be in any more than one to two correlated assets at once. If I felt comfortable risking 50k on K JPY and a JPY and I still want to elect to take both, which is perfectly fine, then what I recommend is that you just lower your position sizing. So, for example, instead of risking 50K on each, you're now exposed to $100,000 on basically the same trade, which is 80 JPY and K JPY. If they both

3:53 go up, you profit. If they both go down, you lose. So, you're likely to lose both trades or win both trades, depending on what happens. You would lose 100K in that situation. And it's basically like doubling your risk on the same trade. So what I do is I break it up if I want to take both trading opportunities and I say you know what instead of risking 50k on K JPY and 50K on odd JPY I'll just split up the risk. So I have one unit of risk which is 50K on the same basic trading opportunity and I'll risk 25K on K JPY and then I'll risk 25K on odd JPY. You can break up that risk because that still accounts for the currency exposure because these are conversely correlated currencies. Anything with an XXX JPY in the second quote pair, they're all going to be roughly correlated. It's not always perfect. Sure. But it does um account for a lot of volatility. Way better than just ignoring currency correlation altogether. What I do

4:40 generally though is I just pick one usually. Sometimes I'll go into two, but not always. It's usually just I pick whatever I think is the best one. So in this case, price if it breaks below this zone, I'm going to lose the trade and if it pops up a little bit higher, then I'll win this trade. I want to also share with you the P&L that we've got this week in the Mission Effects Nix Trades Group. Um this morning I was in a couple trades, which were these right here. It was $28,000. Um, and this was um 7:23 a.m. this morning. So, what happened is um all these trades were starting to bounce. So, for example, Euro GBP was starting to bounce but starting to slow down. And I actually elected to close both of these trades this morning. I'm going to break down with you the reasons why I closed this trade right here. So, I said I currently have no positions open. The reason for the closures on both of the trades are multifaceted. For Euro GBP, price rejected this zone after I entered and

5:26 went into a good profit. But over the course of the last four days, price pushed back into the resistance zone with a bull candle and then yesterday with a bullish wick on the daily candle. And I'll actually show you that right here is whenever we go to Euro GBP, you can see that when I entered right here, price went into profit. It pulled back a little bit. I added my second position. It closed bullish for that daily candle right here. And the next one, it closed bullish yesterday with a huge bullish wick. Now, we've currently got price coming down and it's pushing up even higher. If you ask me, this looks like it's not ready to drop for the time being. We'd need all these recent lows to be breaking before we get like a nice little move to the downside. Perhaps maybe this zone right here would be a good potential target if you do remain in shorts on EuroGBP. But right now, it doesn't look like it's happening. A big rule of thumb, especially on a trade like this where I've added to it and I was risking $80,000,

6:12 is just to get out of the trade if it doesn't look like it's going to work out. So, in this case, I was able to close. It was a little bit of a profit. And so, whenever we look at the trades for this week, we will go to the next one, which is Euro JPY. I entered a buy yesterday. And as you can see right here, simply put, price broke below this zone. It spiked really far below. It went just about halfway to the original stop of $25,000 risk and then it started to bounce and it came back up into a little bit of profit. I didn't feel comfortable with this because I thought that potentially this next zone above price could turn into resistance. So if you look here, this is Euro JPY on the daily chart. You'll know my entry was right here midway through the zone. It popped below the zone, then it started to push up into a little bit of profit. I was concerned that this area around 183 was going to actually turn into a resistance zone. So, I elected to do is just to say, you know what, I'm no longer certain of this trading

6:59 opportunity or at least certain enough to remain in it. So, I just elected to just close the trade and it was a small profit. So, what that does is based on the context, it brings this week to about $41,000 of profit and um I've actually got positive swap fees here. So, right around 42K USD and you look at all the trades that I've taken right here. 1 2 3. Euro GBP counts as one trade, so that's four. And then Euro JPY, so five. So five trading opportunities, and I have lost two, and I've currently profited on three of them. Um, decent profits with the exception of Euro JPY. That was basically a break even trade. $25,000 of risk, and I only close at about 5,000 profit, but it still brings the week into profit because on average, I make more when I'm right and when I win versus what I lose when I'm wrong on average. So with that said, the account currently sits at $612,000.

7:45 And then I've just called this trade in the MFX NIX trades group which I shared just a second ago. So CAD JPY, that's my entry. I've bought there at the zone. We've put a stop below. We put a target above $25,000 risk for a $25,000 potential profit. And then this is the actual the terminal right here where you can see the margin that's used up, the position size, the P&L, and everything like that. So I just called that here at 10:25 a.m. The current time is 10:35 a.m. So it was about 10 minutes ago, and I posted that here in the Telegram channel. As far as any other trading opportunities, the only thing I was really looking for was GBPjpy shorts, but it looks like that train has sailed. It looks like that boat has sailed or that train has left the station. So, I thought that price was going to come back up here into this resistance zone at King's Cross Station, but it did not in fact do that. It ended up just going down even further to Hogwarts instead of

8:31 coming back for me to be able to get on. So, I'm not quite sure exactly if this will set up, but I think that if it does in fact pull back to the upside, I will still be looking for short trades here on GBP JPY. For now, it's just CAD JPY longs. 80 JPY I'm not going to be bothered by because she's already, you know, I'm already in I'm already in a correlated trade, so I don't want to be bothered by that. Um, GBP JPY, I'll still consider taking shorts if she does get back up there. But to be fair, it will probably take like a couple days to maybe a week or so for price to just have a retrace if it happens at all because it doesn't always happen. But if it does, I've got my alert right there. Euro GBP. I'm not quite sure how comfortable I am getting into another trade. I might be comfortable entering deep into this zone if price gets all the way up in here around where all the recent little highs pinned into. I might be comfortable getting into a low risk, very short trade. Um, meaning just with

9:18 a tighter stop, tighter take profit and then just lower risk than usual. So, not 50k, not 80k, probably something like 25k. Um, euro jpy, I don't see anything. ASUSD, I don't see anything for now. Nothing on NZDUSD except for the setup that we've already talked about a couple times this past week. If price pushes a little bit high into this resistance zone, I do think it'd be perfect risk structure for short trades. Because if you just enter a short position right there, the stop above and a target below, you could risk whatever you're comfortable risking. Perhaps that's £100. Perhaps it's £500. Perhaps it's a,000 quid. Um, it's whatever you want, right? So, you could risk whatever you want. For me, I'll probably risk maybe £25,000, not pounds. Probably risk 20. I'm sorry, guys. I can't keep talking with a shitty English accent the rest of this video. So, I'm just going to switch back to my normal Texas English, Texas non-English

10:06 accent here. I'm not risking 25,000 pounds. I will probably be risking 25,000 US dollars if price gets up here in the resistance zone with a stop above and a target below. That's what I'll be looking to do. Cool. So, EuroGBP, we've already talked about that. Euro GPY, we talked about this. Euro CAD did not go down here to the support zone and set up as I thought it would. So, I've ended up just skipping that trade, right? There was no setup. Um, if it does get up here into the resistance zone, I'll consider getting short. I've got my alert right there along where the highs are and if price gets up into there, I'll probably go short on that. USD JPY, it's the similar setup to CAD JPY and 80 JPY. Um, but I won't be taking this because I'm already in CAD JPY. So, cool. But it's set up technically. It's there at one daily low. You can argue this is a support resistance zone from um the past right here because of those little highs

10:51 and lows that have bounced. So, sure, I think we might see a little bit of a bounce here, but not clear enough for me to want to take this trade. I like CAD JPY a lot more. Um, GBP Canadian dollar, I don't know if she's going to set up anytime soon, but I remain with my alert here at the support zone. GBPUSD, I don't know. I don't have anything. CHF JPY, I don't have anything except for an alert here at this little resistance zone, but to be honest, I think I like GBP JPY a little bit better. So, for as far as JPY pairs, I'll probably just stick to GBP JPY. I've just removed all my stuff here from the chart. Um, Euro USD, I don't see anything for now. GBP NZD, nothing. No clear support resistance zones. USD CAD coming back up to the resistance zone that we sold off of last week. Um, however, since price did not make a lower low, I don't think I feel comfortable taking it, especially if it just paints a higher low and then goes back into the zone. That's

11:37 generally not a good sign of weakness. It's a sign of strength that might price might break back above it. Nothing on GBP AUD, nothing on Euro AUD. Even this little zone down here, I don't feel comfortable taking a trade off of it. It's not that clear. This thing's just been in a straight bare run. GA and EA USDCHF. I don't think price is going to be getting back up here to this zone anytime soon. And as a matter of fact, I'm just going to delete the alert and delete this rectangle from the chart. Um, I don't see anything here. AD Canadian dollar, nothing. We're in a straight bull run. I do think that this price will in fact try to go higher and I don't see any reason to get out right now or I don't see any reason to get into a trade right now. Sure, we could pull back and have a little higher low and then go up higher. The problem is is like where do you enter and where do you put your stop? I don't know. I don't see any clear zones. That's how I structure risk and not going to be taking a trade

12:22 there. NZDPY, if you ask me, I would say that this might still keep going up and that's really convenient since since I'm in a long on CAD JPY. These JPY pairs are just in really bullish kind of states right now. Even with the recent pullbacks, the pullbacks offer great entries for just relief rallies provided you can structure the risk. How do you structure the risk on this? I don't really see any clear zones except for that right there. I wouldn't even use the zone that far. I'd probably keep it something like this. Um, so it's not even their end of the zone yet really. But I again like when you compare something like this to something like CAD JPY or even AUD JPY, those look a lot more clear. This looks a lot more steady state. It looks a lot more reasonable. It looks a lot easier of a trade. So I've entered that. And of course, I I don't even have to target very far to have my profit target hit. If it just goes halfway to where the previous highs here on the daily were,

13:08 if it just goes halfway there, I make 25K. I'm comfortable with that. I'll call it a day at that. Last one is NZDPY, which we just discussed. So, there's nothing else there. So, this is my analysis for today. My throat hurts from having to try to talk with an English accent. I'm surprised I was able to kind of keep the charade going that long. But, let me know if you like this analysis. Let me know what you're looking at trading. And let me know if my free Telegram channel is helping you simplify your trading. I love you all so much. Thank you for being here in my free Telegram channel. Brings me so much joy as I sit here in my high-rise every morning, sometimes yelling at you through this microphone right here to try to teach you trading. Thank you for being here. Cheers.