I often see experienced traders encouraging new people coming to just practice with one major currency pair. But why is that? Is the goal to teach new traders to be patient and build up discipline to strike when the moment is right? What is the problem if people want to practice with multiple pairs as they are getting into trading?
2 Likes
People often advise new traders to get to know one pair at first, to study its every move and its unique nuances of behaviour. I think that’s going too far - pairs are either historically high volatility or low volatility, and that’s almost as much as you need to know. Except that if the banks are aggressively buying USD and selling JPY, why would you be fooling around with EUR/CHF?
6 Likes
For a trend trader EUR/CHF is very consistent once an order flow moves price action.
2 Likes
Trading with multiple pairs makes trading complex and focusing on only a single pair will develop a better understanding about that pair.
4 Likes
Each pair has its own behavior, like for example, about BTCUSD, as I believe, the probability of a very sharp jump or dump is very high on that, on the other had USDCAD for example, is not very likely to do so
1 Like
Focusing on a single pair will help you earn a better understanding of that particular pair. But it’s not obligatory to focus on one pair but it’s for your betterment.
1 Like
It is good to be focused because your analysis and understanding of market structure will become deeper with time, but I think it will be better to concentrate on 2-3 pairs instead of just one.
for me they are EUR/USD and USD/JPY and rarely USD/CAD or AUD/USD
4 Likes
When you’re new to trading, it’s easier to stick with one currency pair. You get to really know its patterns, and it’s less overwhelming. Like learning to juggle!
2 Likes
This is key, but you need to develop your strategy or strategies first, and this is the difficult part.
Once you have a strategy in place then you will have a set of rules to follow as part of that strategy, which will tell you when to “strike”.
When those rules are in place then it is about mastering the strategy, not a particular pair.
2 Likes
Starting with one pair allows for focused learning, simpler management, and reduced risk, especially for beginners.
Why Start with multiple pairs?
I often see newbie traders wanting & eager to get their hands off many pairs. But why is that? Is the goal to help new traders build up account so fast rather thani be disciplined to strike when the moment is right? What is the problem if newbies practice with single pairs as they are getting into trading?
1 Like
There are a lot of reasons to trade multiple pairs. First it depends on your trading strategy and style. If your goal is to be a proficient scalper trading the minute charts, you don’t have time to concentrate on more than one pair. You could lose an opportunity while flipping though charts. Conversely, if you are trading on the hourly or higher, I see no reason why you can’t or shouldn’t trade more than one pair. In fact I think it is beneficial. It will not only help you evaluate if your strategy is a good overall one that would work in multiple scenarios (and possibly not just taking advantage of a streak on a particular pair), but it also helps eliminate taking false entries because you are impatient. Even though your strategy may not be giving you all the signals you need to go ahead, you say it’s close enough and do it anyway. This usually turns out badly. Looking at multiple pairs allows you to not be obsessed by one. You have more opportunities for your entry to happen and so you can be pickier about it. Still, I would probably not stick to more than four when first starting. This is because it will take you time to get your charting down and fine tune what you are looking for. Ask yourself realistically how much time it takes you to reanalyze the chart when a new candle forms. And what percentage of the candle that is. If it’s 50%, either your timeframe is too short or you’re over analyzing. Either way you don’t have the time to do multiple pairs. If it’s 5% you do. As you get used to it and your speed and familiarity grows, you can expand.
1 Like
Keeps new traders from spreading themselves too thin.
2 Likes
Simply put it reduces risk. The more you analyze you’ll start to notice there’s strong positive/negative correlations between pairs. I never trade more than 2 pairs at a time and never with the same currency in either. Example: I’ll trade CADCHF & EURAUD. There’s actually a little correlation there but not enough for me not to trade both at the same time. I wouldn’t trade USDJPY and EURUSD at the same time because both have USD and a strong correlation. The whole goal of trading is managing risk. I recommend trading 1 pair at a time but analyze the majors as well as the exotics.
Because It simplifies the learning process, allowing you to understand the unique behavior and patterns of that pair thoroughly.
If you notice the behavior of currency pair’s movement, you will see that not all the currency pairs have same type of movement. So, focusing on a certain pair helps traders understand it’s movement nature easily.
Trade multiple pairs don’t mean you keep flipping all 28 pairs left and right until you find a setup. Different day different currency will move. You need to focus on what currency moved and then look for your setup there. Doesn’t matter how beautiful the setup you’ve found but if the larger player is not interest in it. It will fail. Period.
I follow only one trading pair USDCHF and I feel trading in only one pair develops depth understanding of traders.
Thing is that different currency pairs are not just different charts. Each currency pair has its own peculiarities. And these peculiarities affect its movement.
Beginners who do not know about these features may not expect a pattern in their movement. That’s why some experienced traders recommend to choose one currency pair (as a rule it’s EURUSD) and practice on it. Then, when basic knowledge of trading appears, you can carefully start moving to other pairs.
I recommend to read about movement peculiarities of this pair. There is a lot of information about it online. Knowing these characteristics, you can get used to its movements faster.
Besides, as a rule, beginners start with small deposit. And size of this deposit is not enough to provide both free margin and ability to trade several pairs at once. It seems to me that this may also be the reason for such recommendations.