Hello, I'm trying to work out position sizes to take with spreadbetting if trading 2 different currency pairs that are highly correlated.
I think the maths is simple but I've been trying to figure it out for hours but not managed.
Say currency A is trading at 10,000 and currency B trading at 8000
I want to risk £20 on each trade if they move an equal number of points.
E.g if A moves 20 pips then for a £1/ pip bet I could lose £20 at the stop loss.
If B moves 20 points how much money per pip must I bet to risk the same monetary value relative to the size of A?
I've been trying ratios
10000 : 8000
1.25 : 1
1 : 0.8
Then I don't know what to do?
I don't know if my question make sense but what I'm trying to do is work out how to trade correlated currencies.
What I am trying to ask is how do I work out how much money to risk per pip if the currencies are correlated but of different sizes?
Please help
I think the maths is simple but I've been trying to figure it out for hours but not managed.
Say currency A is trading at 10,000 and currency B trading at 8000
I want to risk £20 on each trade if they move an equal number of points.
E.g if A moves 20 pips then for a £1/ pip bet I could lose £20 at the stop loss.
If B moves 20 points how much money per pip must I bet to risk the same monetary value relative to the size of A?
I've been trying ratios
10000 : 8000
1.25 : 1
1 : 0.8
Then I don't know what to do?
I don't know if my question make sense but what I'm trying to do is work out how to trade correlated currencies.
What I am trying to ask is how do I work out how much money to risk per pip if the currencies are correlated but of different sizes?
Please help
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