How to Spot Hidden Double Exposure

Two trades that are one

Hidden double exposure is holding two positions that share a leg, so that one move hits both at once. Take the euro against the dollar bought at 1.17398 and the pound against the dollar bought at 1.33751, the closes on 17 December 2025, 0.40 lot each — a lot being 100,000 of the first currency. Every pair has two legs. Buying the euro against the dollar means selling dollars; buying the pound against the dollar means selling dollars again. The dollar is a leg of both, on the same side, so it is held twice. Two stops of 25 pips are 100 dollars each and 200 together, two per cent of a 10,000-dollar account, and a dollar day of 80 pips against both costs 640.

Two boats tied to one buoy

Picture two boats tied to one buoy. They sit apart on the water and look independent, but when the tide moves the buoy both boats swing with it, because both ropes run to the same thing. The buoy is the dollar and the boats are the euro trade and the pound trade. A move in the dollar is the tide, and it moves both boats at once, the same way, by about the same amount. The ropes are under the water, which is what makes the exposure hidden. The buoy is not hidden at all: it is written in both symbols' names, on the same side, for anyone who reads the name as two legs.

This paper is locked