Alright, over the week I have been improving and adjusting my trading system which is still undergoing testing at the moment. The initial idea of how my trading system came to me is found Click here on babypips. I haven’t updated my recent findings but I will do that soon. I discovered something about Currency pairs that could help Newbies to improve there risk management practices. I remember selecting my preferred Currency pairs based on the RSI differential ( click the link to see how I came about that) but I was totally wrong. I soon discovered that selecting your preferred Currency pair should also largerly depend on Risk management optimization.
Let me use this trading scenario. My trading system have been formed on the AUDCAD pair and I saw it as a perfect time to enter the trade. I went ahead to set my SL 322 pips against my trade direction. I calculated my Risk capital at 0.01 position size and I discovered I would be Risking approximately $2.2 on that trade. But here is another scenario where I discovered a good set up on the EURGBP pair and I place SL 322pips against my trade direction. I calculated my risk capital at 0.01 position size and I found out i would be Risking approximately $4.2 on that trade, What!!! X2 of AUDCAD!! So there are actually cheap currency pairs!! Most new Forex traders are not aware of this and I’m bringing it to your notice that there are cheap currency pairs and that should be one huge factor in deciding your preferred Currency pair(s). Risk management is key and we should always stick to it, that includes trading cheap pairs. These are currently the cheap pairs you should be trading, we should know they are subject to change. The risk capital displayed on each has a SL of 322pips against the trade.
