Hi Everyone,
A question on currency pairs
I recently saw a video explaining that traders should try to pair a strong currency with a weak currency.
Using a average of last weeks performance
I cant remember the exact process, as i just brushed the info off at the stage.
Still using the main currency but not necessarily pairing with the USD
Like AUD/CHF
Whats the pros & Cons?
It makes complete sense to have a long bias on a stronger currency and a short bias on a weaker one. There are various ways to gauge which is strong and which is weak, and they should all give very similar answers - over the same time-scale. Its not insane to go short on a currency that is strong against everything else - but you better have a damn good reason.
Time-scale is key here - if you generally hold a forex trade for 12-24 hours, there is little help in knowing that USD say has been strong over the last 10 years.
Lot of people use USD as their yardstick, others JPY.
It also helps by encouraging viewing the leading pairs as a group so that you’re not doubling up exposure unintentionally - so e.g. short AUD/USD and long USD/JPY doubles your exposure to risk from USD weakness.
I believe that it is worth working only with those pairs where you understand how to organize the work correctly.
Sorry but what do you mean by organising the work correctly
Thank you for the reply some great info.
I think for now i will be taking the long bias - lot less stress haha unless i have a damn good reason but need to approach both with a good reason.
What do you believe is a good time scale for holding a trade for the 12 hour mark?
Great point on the doubling of exposure