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A021: Basket System

As mentioned in tandem trades, T101 is used to identify potential pairs to trade. Ideally we want to trade (only) the strongest pairs. Being the few of the strongest pairs, they have relatively moved quite a number of pips. They are also the higher risk pairs to trade due to chances of failed reversal.

trader101 suggested to trade all 14 pairs at one direction.

This is a well-known fact in risk management world. See Modern Portfolio Theory. In general MPT tells us, the portfolio risk (standard deviation) is lower if we have more risk components within the portfolio.

The suggestion to trade 14 pairs gave birth to T101 Basket Trading System.
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