What to trade?

So far I have only been trading on XAU & USD, I notice that consistantly EUR & USD are the most traded…are there advantages or disadvantages for a newbie to swap to that?

At present I have been watching the EUR/USD charts to check movement direction and mostly the XAU/USD follows very soon after…well except for the odd occasion where they don’t line up anyway :cool:

I prefere to trade XXXJPY. They are good move there.

Just eyeballing it:

EURUSD is the most liquid and consistently has the lowest spreads. GBPUSD has a bigger range, a little lower liquidity, correlated to the EUR, and has decent spreads (about 2x that of EURUSD most of the time). CAD pairs correlate well to commodity prices (especially oil).

I’m still in the learning stage but that is some of the information I picked up.

According to DailyFX’s most recent correlation report, Gold and the EUR/USD had a correlation of 0.76. Correlations of 1 mean they are perfectly correlated in the same direction whereas numbers closer to 0 mean they move randomly without any correlation. So what you described makes sense.

The tighter spread on EURUSD means that you are losing less money on the spread each time you trade. It really adds up if you trade many times per day!

As a newbie trader, imo, what you should really be doing is trading everything all the time in an effort to weed out what types of scenarios and situations work for you personally as a trader. The more you do this, the quicker you will discover what actually works for you. Really, again imo, it is self defeating as a new trader to only trade one particular pair or even a small set of pairs…I would recommend finding out what works for you by trying anything and everything you can get your hands on. Enjoy :slight_smile:

Find the pair that moves the most during the session you trade.

You had the right idea of monitoring other pairs of currencies. Since the market is so volatile, constant monitoring of the currency pairs is needed. Trading on lots of pairs means monitoring lots of currencies and time is needed for it. Quality monitoring is important to succeed in this business.

Many successful Traders concentrate on learning 1-3 pairs. Get to know how they work, each has a character of it own. Your trading method will determine how many pairs you can monitor and analyse