Risking 1% per trade sounds disciplined until you're holding four positions, XAU/USD, XAU/EUR, XAG/USD, XAG/EUR, that all move in largely the same direction on the same macro catalyst. On paper that's 4% risk; in practice, because the positions are correlated, it behaves much closer to a single, larger 4% bet on one outcome.
1. The correlation problem
XAU/USD and XAU/EUR share the same underlying gold price; XAG/USD and XAU/USD often move together on the same macro drivers (dollar strength, real yields). Treating each as an independent 1% risk decision understates the combined exposure if the underlying catalyst hits all of them the same way at once.
2. A practical adjustment
Rather than allowing four separate 1% risk allocations across correlated pairs, treat the group's combined risk as a single budget, capped around what you'd accept for one position. If you're already at that combined limit across gold-related pairs, a new gold-related trade should reduce size on existing positions or wait, rather than stacking on top.
3. Correlation isn't fixed
How tightly these pairs move together changes over time, sometimes gold and silver diverge sharply on silver-specific industrial news, sometimes EUR pairs decouple from USD pairs on ECB-specific news. Periodically checking the actual rolling correlation, rather than assuming it's constant, keeps this risk-budgeting approach accurate.