Running several positions without running out of margin

Holding several positions at once sounds like diversification. In the currency market it is usually
the opposite — and it is the common reason an account runs out of margin despite every trade having a
stop.

1. The correlation problem

Currency pairs are not independent. Buy EUR/USD, GBP/USD and AUD/USD at once and all three are
short-dollar positions. One strong dollar headline loses all three together.

You think you hold three trades risking 1% each. In reality
you hold one trade risking 3%.

2. The groups worth knowing

• Short-dollar group: long EUR/USD, GBP/USD, AUD/USD, NZD/USD — all moving
  together.
• Long-dollar group: long USD/JPY, USD/CAD, USD/CHF.
• Commodity group: AUD, NZD and CAD usually move together and with commodity
  prices.
• Haven group: JPY and CHF strengthen together when markets turn
  risk-off.
• Gold and silver move together almost always, with silver swinging harder.

3. Measuring total risk properly

Rather than adding up each position’s risk, group them by the factor driving them
and total within each group:

• Long EUR/USD 1% + long GBP/USD 1% → short-dollar group risk = 2%
• Add short USD/JPY 1% → same group → 3%
• Add long gold 1% → its own group, but still inversely tied to the dollar → count part of it

A practical rule: no more than 2–3% risk within one group, and no more than 5%
across the account.

4. Margin: the number to watch

Margin level = Equity ÷ Used margin × 100%

This decides whether the account survives — more important than the running profit on screen.

• Above 500% — comfortable.
• 200–500% — normal.
• Below 150% — time to reduce.
• At the broker’s margin call level (usually 100%)
  — a warning.
• At the stop-out level (usually 20–50%) — the broker closes positions, starting with the worst.

Those last two differ between brokers. You need your own broker’s numbers, not the general ones.

5. Three practical rules

• One idea, one position. If you think the dollar will weaken, pick the pair that
  expresses it best rather than opening four.
• Check a correlation table before opening a
  second position. Many platforms and analysis sites include one.
• Cap the number of simultaneous positions — three, say. That one simple constraint
  prevents most of the problem.

6. The cost of holding several

Every extra position is another spread, another
commission, and another swap each night. Four
positions expressing one idea cost four times what one larger position costs — at the same risk.

This article is for information only and is not investment advice. Conditions and fee levels are published by the brokers and can change at any time — check with the broker you actually use. Leveraged forex and CFD trading carries a high level of risk and can cost you your entire deposit.