Discussing the article: "MQL5 Wizard Techniques you should know (Part 17): Multicurrency Trading"
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Check out the new article: MQL5 Wizard Techniques you should know (Part 17): Multicurrency Trading.
Trading across multiple currencies is not available by default when an expert advisor is assembled via the wizard. We examine 2 possible hacks traders can make when looking to test their ideas off more than one symbol at a time.
Multi-currency trading unlike trading a single currency reduces risk concentration. Because each account has a set leverage level and therefore definite free margin amount, when faced with a situation where you have to trade more than one symbol the amount of free margin to be allocated has to be split among all the currencies available. If these currencies have no correlation or are correlated inversely, then the risk of over reliance on just one of them can greatly be mitigated.
In addition, if a trade system where the opening of positions across multiple currencies is not done in parallel to minimize risk as mentioned but is sequential where each currency pair is considered at a distinct time, then cross-market opportunities can be utilized. What this would involve is opening sequential or follow on positions whose currency pairs correlate inversely to already opened positions if opened positions are drawing down, or doing the opposite if already opened positions have a float. The pairing of currencies as either margin or profit in any pair makes this process particularly interesting when one is selecting a cross-market opportunity, besides considering correlations alone.
The margin profit pairing in each currency pair also presents an advantage of multi-currency trading, which is hedging. Bordering on arbitrage, a practice not only frowned upon by most brokers but also very difficult to implement in practice, hedging with multiple currency pairs based on their margin or profit currencies can be engaged with pending orders especially in situations where a trader could be looking to hold positions over high impact news events or even the weekend.
Author: Stephen Njuki