Do you check correlations between pairs before you open a second trade?

Two pairs can move together, so two trades can carry the same risk twice. A long position in one pair and a long position in a closely linked pair may behave like a single larger position. What moves EUR/USD and what moves GBP/USD both list shared drivers, such as the dollar, that can link pairs and make two trades look more independent than they are.

Members often find this out only after both trades move against them. Correlation between pairs is not fixed, and it can change around a release or a central bank decision, when one driver takes over from another. The question is whether you check how the pairs relate before the second trade, and how you measure that relationship when you do. A simple check of the currencies in each trade can reveal most of the overlap without any statistics at all.

We would like to hear how you do it:

• Do you check correlation before you open a second trade, and how do you measure it?
• Have two trades ever behaved like one larger position? What did you do?
• Which pairs do you treat as linked, and which as independent?
• What rule do you use to limit total exposure to one currency?

Please share your own approach and reasoning, not calls for others to copy. Posts that promise a direction or sell signals will be removed.