http://www.ksaboys.com/eur-usd-forex/
eur usd forex
in Forex Why if EUR/USD price goes up the price of the USD/CHF tends to go down?
then What is your Hedge strategy, How much you buy and sell
The reason that the two mentioned currency pairs tend to move opposite of each other is do to a relationship called corellation. These two happen to have a high negative corellation. If two pairs have a positive corellation they would tend to move in the same direction.
I like the chart that Kathy Lien produces at http://fxtsp.com/forex_report4.htm
What is interesting with the two pairs that you mentioned is that you do not buy and sell…you only buy positions in both. If you structure your hedge properly you will also receive a very nice interest payment every day, 7 days a week regardless of what the currency pairs price does.
The number of lots you need to buy to set up a balanced haedge is dependent on a number of variables such as volatility, market conditions, current trends, interest rates, corellations etc.
This can be greatly simplified by using one of the proprietary Allocation Models available from a couple of sources.
Good luck.
Paul