Why are you trading too many currency pairs?

Trading multiple currency pairs increases the risk of making mistakes. For example, you are trying to track five different pairs, each with its own characteristic spread and varying levels of volatility. Let's assume you have a capital of 12,000 PLN and you invest 2,400 PLN in each pair. A single spread difference of 0.5% can cost you 12 PLN per pair, which results in a total loss of 60 PLN from the spread alone for all five pairs. Another issue is unexpected slippage - if the rate suddenly changes by 1% before your stop order is executed, you could lose an additional 120 PLN per pair, totaling 600 PLN if this situation applies to all five pairs.

A larger number of currency pairs to analyze means that your attention is divided, and as a result, you may miss important signals. Each pair has its own dynamics, and the correlations between them can cause you to unknowingly duplicate risk. For example, EUR/USD and GBP/USD are often correlated, so investment decisions in both can lead to doubling the risk instead of diversifying it.

Assuming your initial 15,000 PLN was divided into five pairs, that gives 3,000 PLN for each. Over the course of a month, due to slippage and spreads, you lose an average of 2% on each pair. This means you lose 60 PLN per pair, totaling 300 PLN monthly, which is 2% of the total capital. With a heavily diversified portfolio, such losses can quickly accumulate, reducing potential gains and increasing stress.

Instead of jumping into many pairs, focus on two or three pairs that you understand well. Study their correlations and choose those that have the least impact on each other to truly diversify risk. Implement regular performance analyses and evaluate your strategy weekly. Limit transactions to those that have a high probability of success and apply strictly defined stop-loss orders to minimize slippage risk.

Reduce the number of pairs to a maximum of three and focus on their in-depth analysis.