⚠️ The Danger of Overlapping Correlated Trades Across Sessions
🎯 The Lesson
Opening multiple trades across different sessions (Asia, London, New York) can feel like diversification…
but if the trades are correlated, you’re not spreading risk —
you’re multiplying it.
This is one of the top hidden reasons traders blow accounts:
multiple trades, different entries…
but one direction, one idea, one exposure.
🔗 1. Correlated Trades = One Big Position
Example:
You open during Asia:
-
EURUSD buy (1% risk)
During London:
-
GBPUSD buy (1% risk)
-
XAUUSD buy (1% risk)
On paper:
3 trades × 1% = 3% risk
In reality:
👉 All three trades depend on USD weakness
👉 True exposure = 3% on the SAME idea
If USD strengthens suddenly, all three hit stop loss at once.
This isn’t risk management —
it’s clustered risk.
🕒 2. Sessions Add Volatility to Correlated Trades
Asia gives slow structure…
London breaks it…
New York destroys whatever is left.
If you stack correlated trades before session transitions:
-
London open
-
NY open
-
News hour
-
London–NY overlap
Your exposure increases exponentially, not linearly.
One market shock takes out everything simultaneously.
🔍 3. How to Measure True Correlation Risk
Rule of thumb:
Pairs above +0.75 correlation = same direction risk.
Pairs between +0.5 and +0.75 = partially overlapping risk.
Examples:
-
EURUSD & GBPUSD → 0.90 correlation
-
XAUUSD & GBPUSD → 0.70 correlation
-
NAS100 & XAUUSD → negative correlation but same USD driver
If the driver is the same → risk is the same.
🔢 4. Limit Your Total Correlated Exposure
Professional rule:
👉 Maximum 6% total exposure across all correlated positions.
Better rule for retail:
👉 Maximum 3–4% exposure across correlated trades.
Example:
If you want to take 3 trades linked to USD weakness:
-
Risk 1% each → total 3%
OR -
Risk 0.5% each → total 1.5%
This reduces cluster drawdowns.
🛑 5. The “One Idea, One Position” Rule
If all trades rely on the same underlying idea (USD strength, gold trend, EUR flow):
👉 Treat them as ONE position, not three.
This prevents:
-
Overconfidence
-
Overexposure
-
Compounded losses
-
Deep drawdowns
📉 6. Close Correlated Trades Before Session Volatility
If you’re holding correlated positions into:
-
London open
-
New York open
-
CPI / NFP / FOMC
-
Major session overlaps
Reduce size or close some trades.
These periods hit correlated assets together.
Protect your equity before the volatility hits.
🚀 Takeaway
Trading multiple correlated pairs across sessions doesn’t diversify risk —
it duplicates it.
Asia → London → New York amplifies exposure and compounds losses.
Control correlation, reduce overlapping trades, and treat every idea like one unit of risk.
Your account will immediately become safer, smoother, and more consistent.
📢 Join my MQL5 channel for more trading & risk-management insights:
👉 https://www.mql5.com/en/channels/issam_kassas
