Which Currency Pair Do You Trade?
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I have a strong understanding of fundamentals and usually use that to get my directional bias, then use technicals to set up the entry and exit points. The method has worked well for me, but it does keep me away from some currencies whose fundamentals I don't follow much at times, so I usually trade the majors, with a focus on commodity currencies such as AUD/USD and USD/CAD, carry currencies (JPY crosses) and of course the most liquid one of all EUR/USD. Everything else I usually stay away from because I don't follow them as closely, and also because the lack of liquidity in some pairs can cause unwelcome volatility.
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It seems that a lot of people like the highly volatile pairs, and I'm not exactly sure why. There doesn't seem to be any reason for it since all forex brokers offer you more than enough leverage to make up for the lack of volatility in any pair. I can't help but think that maybe not everyone here has grasped this concept yet:
It does not matter if the pair moves 1000 pips/day or 100 pip/day. Think of leverage as a "volatility compensator". For pairs that don't move as much, you simply set lower targets and stop losses and slightly turn up the leverage knob. That's all there is to it (almost). There is also the matter of pip values and spread to consider, but those usually don't make a huge difference in the majors unless you day trade, which I normally don't.
Anyway, no offense, but those who trade GBP/JPY simply because it has a high ATR, in my mind, don't know what they are doing and should carefully reconsider their participation in the market. We need some volatility in order to profit, but with 100:1 or higher leverage at our disposal, we don't need very much.
It does not matter if the pair moves 1000 pips/day or 100 pip/day. Think of leverage as a "volatility compensator". For pairs that don't move as much, you simply set lower targets and stop losses and slightly turn up the leverage knob. That's all there is to it (almost). There is also the matter of pip values and spread to consider, but those usually don't make a huge difference in the majors unless you day trade, which I normally don't.
Anyway, no offense, but those who trade GBP/JPY simply because it has a high ATR, in my mind, don't know what they are doing and should carefully reconsider their participation in the market. We need some volatility in order to profit, but with 100:1 or higher leverage at our disposal, we don't need very much.
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That's not really true. If you know how to size your positions correctly, and if your broker allows you a fine enough sizing granularity for your account size and risk appetite, then you know that which pair you choose to trade has very little to do with risk. In fact, the only connection between your risk and the pair you are trading is your transaction costs - if the pair has a higher spread, then that can translate into higher risk (depending on how you define risk). Besides that, the two concepts are completely unrelated.
the thing with purely relying on fundamentals is the every day must start with reviewing data ( ok i exaggerate) but technical analysis is a quick and simple way to determine entry/exit. Backed up with a sense of direction that fundamental anamysis might give the trader is a lot more comfy taaking new positions.
Volatility is an interesting one..i trade currency pairs with high intra day volatility but low interday volatility!! these give you second and third chances .. others who follow this technique know exactly what im talking about and how it has great advantages.
What i DO NOT AGREE with is that leverage compensates for low volatility!!! NO NO NO.. quite the opposite.. low volatility and high leverage means that ur mistakes are maginified with fewer opportunities to rectify...
I often trade crosses where the fundamental of the countries are strongly related..eg currencies in the asian subcontinent... or aud/nzd...
Volatility is an interesting one..i trade currency pairs with high intra day volatility but low interday volatility!! these give you second and third chances .. others who follow this technique know exactly what im talking about and how it has great advantages.
What i DO NOT AGREE with is that leverage compensates for low volatility!!! NO NO NO.. quite the opposite.. low volatility and high leverage means that ur mistakes are maginified with fewer opportunities to rectify...
I often trade crosses where the fundamental of the countries are strongly related..eg currencies in the asian subcontinent... or aud/nzd...
High leverage means that EVERYTHING is magnified, your profits and your losses, so what I am saying is that there is no reason for people to trade GBP/JPY simply because it has a high daily range - the same effect can be obtained by using higher leverage on something like AUD/NZD or EUR/GBP. Very simple concept. I don't understand which part of that you are disagreeing with.
I like to trade the JPY/USD as it usually presents good opportunities and large price swings for a quick profit.
I personally trade the GBP/USD, EUR/USD and USD/JPY and they've been very good to me over the last few years.
If there are no decent set-ups on these three pairs I will usually look to the FTSE 100 or the Dow rather than looking at some of the other currency pairs.
If there are no decent set-ups on these three pairs I will usually look to the FTSE 100 or the Dow rather than looking at some of the other currency pairs.
Hi everybody,
My most favorite pairs are USD/GBP, EUR/USD and USD/JPY.
Forex brokers and traders experienced that the Pound traded flat during the Asian session and believes hard that GBP/USD would attempt to break any higher as the session came to a close. Currently, the sterling pound is trading near the opening price of the today’s session. The daily chart shows that this pair is trading very close to a vital swing point, which would require tough force in order to break this level.
Regards
My most favorite pairs are USD/GBP, EUR/USD and USD/JPY.
Forex brokers and traders experienced that the Pound traded flat during the Asian session and believes hard that GBP/USD would attempt to break any higher as the session came to a close. Currently, the sterling pound is trading near the opening price of the today’s session. The daily chart shows that this pair is trading very close to a vital swing point, which would require tough force in order to break this level.
Regards
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