I’m trying to figure out if I find a system to trade and trade that only using one pair or can that system work for any pair? So it doesn’t really matter what I trade. If my system is telling me to trade, I trade, no matter if it’s EURUSD or USDCAD or whatever.
Or are some systems meant to be trading on a specific pair?
IMO, focusing on the majors provides ample opportunity to construct a profitable system, with plenty of backtesting results on these high volatility pairs to ascertain the strength and weaknesses of your system.
The only good example of a pair-specific strategy would be the London opening break-out on GBP/USD.
For the most part, the top 28 pairs are highly correlated. This can be negatively or positively. You will often see that when a turning point is seen in a major pair, such as EUR/USD but also lesser pairs all the other pairs respond in some way at the same time.
The danger is that if you see 6 simultaneous new opportunities on 6 different pair charts, you can be drawn into 6 new positions. In fact its very possible all 6 charts were simply showing a response to a single new factor, so now you’ve got a total exposure 6 times higher than is justified…
you are unlikely to find a strategy that is equally profitable on all currency pairs and time frames, an example would be the variability difference. Regards Greg
I would strongly advise to backtest your strategy on every pair you want to trade in the end state.
When I started writing EAs some time ago I was struck how seemingly universal strategies look totally different on various pairs. Even taking every stupid pin bar will give you statistically significant discrepancy in results between EURUSD / GBPUSD / USDJPY. I admit, that I do not understand what drives the “character” of fx pairs, but definitely we cannot treat them in the same manner.
Yes for sure. if you have a ranging strategy you’d look at CHF pairs etc if you have a trending strategy you will look at GU and other GBP pairs as they move strongly
As per the reply above different strategies will lend themselves better to different pairs .
Backtesting is key
One more note. My broker provides real volume only for certain intstruments (few majors, indexes and commodities) and for others this is just tick volume. If your strategy is volume reliant, you need to be sure how your broker treats the volume for each pair.
Most of the time, some strategies tend to work better for some pairs. For example, you can use the strategies applied for GBPUSD which might not work that well on other pair like NZDCHF.
You can never use the same strategy on all the currency pairs. The secret to success is picking the right currency pair combined with the right trading strategy. Many traders make the mistake of matching up the pair to the wrong strategy and their chance of being a profitable trader comes down a great deal.
So how are you trading? One pair and one strategy? Or different strategies for each pair you trade?
My answer would be yes some systems and strategies do work better for certain pairs. Take the eur/usd pair for example…you shouldnt expect them to behave the same way in the Asian session as they would in the London session. Some strategies depend on high volatility so a session where there is little to no movement wouldnt work.
Yea, that makes sense. Thanks,
Yep, thy work.