This is a discussion aimed at longer term trend following traders. How would you go about selecting which pairs/other instruments to trade together in a portfolio?
Obviously non correlation of the whole group is desirable but how much correlation is acceptable?
Through visually looking at the charts you can tell that certain pairs tend to trend more smoothly than others such as the Eur pairs while others such as Gbp pairs tend to be more volatile, somewhat less predictable.
I have backtested the system I intend to run on all pairs but would appreciate advice on the questions above.
Thanks.
Obviously non correlation of the whole group is desirable but how much correlation is acceptable?
Through visually looking at the charts you can tell that certain pairs tend to trend more smoothly than others such as the Eur pairs while others such as Gbp pairs tend to be more volatile, somewhat less predictable.
I have backtested the system I intend to run on all pairs but would appreciate advice on the questions above.
Thanks.