Chapter 2 What is Basket Trading?
Basket trading is a trading strategy where you simultaneously trade a group of different securities. In forex, basket trading involves buying and selling different currency pairs at one time where the market lines up with the aim of reducing risks and maximizing profits.
To help you really understand forex basket trading, we will try to describe an example.
Let’s say you have performed your analysis and come to the conclusion that the USD is weak and would keep declining for some time. Assuming you want to go long four lots on the EUR/USD, you will have to be totally right that the EUR/USD in particular would rise. If you are right that the USD is weak but for some reason, the EUR doesn’t rise, you will not make any profit or may even lose even though your analysis about the weak USD is right.
On the other hand, with currency correlation, you
Report
