In fact, this category of forex trading advisors is optional to everyone else. Multicurrency can be any of the types of advisers discussed above.
The essence of multicurrency is that by default it allows operation on several currency pairs.
Due to the specifics of forex trading, most advisors adapt to currency pairs with the smallest spread, i.e. to the category of “major” or “major”. Because, in general, it makes no sense to increase trading costs by trading on “exotic” currency pairs, in which the spread will eat up half of your stop loss (at best). However, multi-currency in the description most often boasts those advisors that can trade on unusual combinations of currencies, such as EUR / JPY and AUD / CAD, etc.
Someone likes to say that they don’t like the main currency pairs and that these traders have “the same, one, such a favorite currency pair” among exotic combinations of currencies – it “walks” as it should and is “more understandable” and “more predictable” and “the soul somehow more lies with it”, etc., and all these advantages seem to pay off the overestimated spread. But, in my subjective opinion, this is a fallacy: if at the moment a trader is not good at trading in pairs with the best trading conditions and at the same time it turns out to trade in a currency pair with worse trading conditions, then there most likely is just a good market situation for his strategy which is not currently available on other currency pairs (and which sooner or later will change, and the results will become worse). Thus, the trader is trying to “snatch while they give”.
If you like AUD / CAD or something else like that, then I suggest you just open any such pair (the same AUD / CAD) and compare its graph with the graphs of the “main” currency pairs. After taking this for some time, you will most likely be able to find a similar type of price movement among the “main” currency pairs, which will allow you to save on the spread.
In terms of advisers, as mentioned earlier, our goal is to reduce risks. In this case, the less we pay for the conclusion of the transaction (opening-closing, that is, the same spread), the lower the risk of a negative result based on the results of a series of transactions.
My opinion is that if we trade in a robot, it is better to focus on pairs with a minimum spread.
We have figured out the currencies, go further. Regarding multicurrency, it is worth analyzing such a concept as a correlation.
Correlation is the “similarity” of the price behavior of one currency pair to another.
For example, we open the EUR / USD chart and simultaneously open the GBP / USD chart. Similar? If yes, then direct correlation, i.e. when one pair grows, the other pair grows in a similar way.
Now open the EUR / USD chart and simultaneously open the USD / CHF chart. And now look like? If yes, but “mirror”, then the inverse correlation, i.e. one pair is growing, and the other pair is falling, in a similar way.
I can’t give concrete recommendations for determining how “direct” correlation is between currencies and how much is “inverse.” You can simply determine this “by eye,” or you can use special indicators, like (list indicators) that will tell you exactly how much which currency pairs are similar.
Correlation is the “similarity” of the price behavior of one currency pair to the price behavior of another currency pair.
So, what you need to remember if you decide to enable the multicurrency adviser “at full capacity” and use it on several currency pairs.
- When you have determined which pairs correlate between each other (this includes both direct and inverse correlation), before using the multicurrency Expert Advisor, you will need to filter out only those that are LEAST correlated both in the forward and backward directions.
If you use the EA on currency pairs with a direct correlation, then, roughly speaking, you will trade an overvalued lot (as if you are trading not 0.01 on EUR / USD and 0.01 on GBP / USD, but just 0.02 on EUR / USD), because transactions will be executed in a similar way due to the similarity of movements. If you use the adviser on currency pairs with an inverse correlation, then the profit of the adviser on one pair will be generally compensated by the losses of the adviser on the other pair, and all this minus the spread on both currency pairs.
- It is necessary to calculate risk management based on the number of traded currency pairs. Those. if your deposit would be enough to trade 0.03 lot on one currency pair, then when using the adviser on 3 currency pairs, each of them should put the volume of 0.03 lots / 3 shaft. pairs = 0.01. Because the load on your deposit will, in fact, be threefold (in this example).
In principle, everything again rests on risk management:
- take our deposit
- divide it into several different (!) Tools
- We select for each of them its trading volume
- And go 🙂
One of the representatives of multicurrency advisers is the “night owl”, working at the Asian session. In my opinion, what you need for a leisurely test and gaining experience in automated trading.
Now it’s time to talk about the “not entirely honest” type of advisers, for the use of which no broker, as they say, “pat over your head”, we turn to the consideration of arbitration advisers.