As the title suggests, I am just curious on what your thought, workflow, and/or psychological process/es with regards to deciding which currency pair/s to trade:
Do you guys/gals:
Base it solely on a currency pair’s price action? Base it depending on the trading session time of the day? Base it on the currency pair volatility? Base it on all of these, and possibly depending on much more information?
I am quite lost as of the moment; endlessly shuffling through my Majors watchlist, wherein at the end I’ll just trade random currency pairs, which I think is not that efficient. My currency pair selection is purely random and it makes me uneasy having no filter, or knowledge, on deciding which currency pair/s to trade.
Thank you for everyone who would be sharing their thoughts!
PS. For anyone who would wonder, I am currently paper/demo trading on the 1H and 4H charts (intraday trading.)
I have seen this question several times over the years and the replies are usually trade the majors because they’re liquid and have narrow spreads. Or trade volatile pairs because they move a lot of pips in a short time.
Its logical but not completely convincing.
Maybe somebody more experienced than me could come to the answer from the opposite direction - the pairs you definitely should not trade. And, from experience, why.
Not actually; I think the quality of my entry point plays the vital role! Since, I am a long term trader; so I don’t care about the temporary volatility score!
It took me eight months practising trending trades on a demo account to filter out which pairs were profitable and which were not.
When I went live I had a selection of 12 pairs which worked best, but only because I am a trend trader.
The three most profitable are: AUD/USD, EUR/JPY & USD/JPY. Mainly because when trending they’re the most consistent.
As for losing pairs, I won’t touch any GBP trades because it’s like having a short term diva trading. However, if your trading style is surfing the waves GBP/JPY & GBP/USD are ideal.
BTW. Base it solely on a currency pair’s price action?
Understand that order flows cause price action moves, which means look at charts for likely liquidation zones by losers.e.g. a S&R zone, maybe even a supply and demand zone if surfing the waves…
There’s no short cut to experience, so stick in there for eventual success.
I just have set of currencies which I trade at Hotforex. They are EURUSD, USDJPY, USDZAR and USDRUB. I have different trading systems for every of that pairs.
This is a good question! Well there is no exact answers to your question (damn, in forex you never have an exact anwser).
But you say you are a day trader, so I’d suggest not to trade GBP- and JPY-Pairs, there are high volatile and could trigger your stop loss easily (since we are talking about forex, in some cases/strategies trading exactly those pairs would be the correct anwser, here we go again).
In my view you should focus on Majors because they have thin spreads, good for day traders. Altough I never trade the Majors, I keep my trades 1 to 5 days open so I don’t really care about spreads and when you trade the majors you have to be anti or pro dollar and watch the news. Sorry but that’s not for me.
Read through the school of pipsology and take the quiz "which pair you should trade? " of course this won’t be a 100% anwser to your question but maybe you will understand the way how to pick the right pair(s). You also could check the Marketmilk tool “Currency Strength” on a H4 timeintervall to trade the strong currency agsinst the weak but that’s where you get limited when trading majors…
It’s also good to only focus on a few pairs but as already mentioned it depends on your strategy. To me it would be impossible to only focus on a few pairs, I would be limited to only trade 2 or 3 times a month since signals don’t form that often on my D1 TF so I don’t really care which pair I pick. Sometimes I don’t even know what I’m trading because I think a bullish engulfing pattern is a bullish signal, no matter what pair you are watching.
Another way, which I’m gonna test soon is buying Euro-Pairs when European session is opening because I guess traders will need a lot of euros for trading European stocks so might the demand and price increases for pairs like EUR/NZD etc. while you could close or sell the same pair when London session is ending since trader might take their profits and reinvest in US Stocks when new york session is opening. But as I said, I don’t know yet if this makes sense. Y’all might feel free to comment
I like AUD/USD. I saw somewhere(probably from Babypips email?) that AUD/USD and USD/CAD pairs are 95% opposite. So, I have both charts side by side and it gives me “warm and cozy” feeling in confirmation.
OK… I would say to keep the noise minimal you should focus on one or two pairs for now… Study everything u can about it, know it strengths, apply the strategy that will work for that pair…
On the reverse following up with a lot of pairs will increase the noise and you will miss the details, there’s a saying that “the devil is in the details”…
But with my little experience I would suggest just stick with one or two pairs, it will give u the room to see plenty opportunities… Opportunities are always in the market regardless of the pair/pairs u choose… Its just our greed that triggers us to want plenty pairs
According to me study the currency price of both pairs and compare the charts on the other side. I usually prefer EUR/USD currency pairs to trade because of their higher level of liquidity.
