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Pairs to trade for beginners

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  • First Post: Nov 1, 2012 7:27am Nov 1, 2012 7:27am
I am relatively new to Forex trading and want to practice a bit with my demo account. This is not a how-to-make-money-fast question.

Do you guys find that a certain pair of currencies are easier to trade for beginners? A market that has a clear bias for uptrend/downtrend or one that is known to be currently ranging?

If you were to recommend a chart today for a beginner to trade and learn from, what would it be and why?

Thank you for your time
Quoting Kenawee
I am relatively new to Forex trading and want to practice a bit with my demo account. This is not a how-to-make-money-fast question.

Do you guys find that a certain pair of currencies are easier to trade for beginners? A market that has a clear bias for uptrend/downtrend or one that is known to be currently ranging?

If you were to recommend a chart today for a beginner to trade and learn from, what would it be and why?

Thank you for your time
The most important currency or your bench mark is the USD.
That dictates most of the pricing for all currencies and commodities in the world due to it's reserve currency status.

there Eur/usd,Gbp/Usd, Aud/Usd, Nzd/USD, are positive correlated currencies
the USD/JPY, USD/CAD, USD/CHF, are negative correlated currencies

the EUR/JPY is the only other pair not involving the USD in it's pricing

all other pairs are synthetic EUR/GBP is Eur/Usd vs Gbp/Usd and so on


now the correlation is not equals one

individual economic policies, GDP, and other factors will affect each pair respectively

take the USD/JPY it's correlation is -.13 while the USD/CAD -.62
The GBP/usd is .74 while the AUD/usd is .69, Australia has been cutting interest rates, BOE has been doing easing, the BOJ continues to battle appreciation the Euro continues to battle debt crisis, and the USD continues to have an accommodating monetary policy.

ther is no easy pair, you have to understand the drivers for each currency, but if i was to give you advice stay with one with + roll over rates for the particular position you are taking and a low beta.

example

i pay roll over when longing the Euro so I long the GBP which is highly correlated with positive roll over for longer term positions while keeping my eye on the UK economy, or the AUD as i get higher roll over.

when shorting I short the Euro for positive roll over, as the AUD roll over short is too expensive. However if your profit viz a viz your risk justifies it then you can break this rule. 21 day at .00006 pip on average roll over is 12.6 pips on a monthly position. so account for this I either, hold long term AUD or GBP and intraday Euro, or when it does not compromise my positive expectancy then I do not mind.

gbp/usd has a beta of .88 (the bench mark is the Euro Usd, it composes more than 50% of the USDX, but you can use the USDX as the bench mark to me it is just more convenient when making calculations to use the fiber as I trade the fiber)

on beta alone I say go for long the GBP as it is less risky than the AUD, and when shorting take the USD/CAD as it is less risky than the JPY and CHF
AVT INVENIAM VIAM AVT FACIAM
Euro usd i good for start helps a lot and builds confidence
Quoting the redlion
The most important currency or your bench mark is the USD.
That dictates most of the pricing for all currencies and commodities in the world due to it's reserve currency status.

there Eur/usd,Gbp/Usd, Aud/Usd, Nzd/USD, are positive correlated currencies
the USD/JPY, USD/CAD, USD/CHF, are negative correlated currencies

the EUR/JPY is the only other pair not involving the USD in it's pricing

all other pairs are synthetic EUR/GBP is Eur/Usd vs Gbp/Usd and so on


now the correlation is not equals one

individual economic policies,...
Thank you very much for your insightful reply. I have to admit that much of it passed right over my head, I am a beginner here.

But apparently, I wouldn't expect to start with pairs not including the USD, which you seem to be a firm believer in, I am glad your experienced reply affirmed that.

I am going to stick to EURUSD for now, specially during the time when European market meets the US market.

Thank you very much again, going through your profile, seems like you are much liked here
Quoting usmanp
Euro usd i good for start helps a lot and builds confidence
Yep, I agree now. I have read much about that for the past few hours and I realized that it is best to start with that pair when you are starting out.

Thank you
On the one side that's EURUSD because it's market with high volatility and you can perfect train your skills.

On the other side USDJPY has a lot of perspectives despite the crisis in Japan now... Can be interesting and it changes not so fast. You can trade on news here also.
Quoting meng88
On the one side that's EURUSD because it's market with high volatility and you can perfect train your skills.

On the other side USDJPY has a lot of perspectives despite the crisis in Japan now... Can be interesting and it changes not so fast. You can trade on news here also.
Thank you very much, this is exactly the kind of answer I needed. And thank you for using the correct phrase that I searching for in my head, "train your skills".

I see the point about EURUSD with its high volatility, this means it would be more logical and would show you the real colors of the Forex market. I agree with that alot now.

But regarding USDJPY, I am not sure about it, I see the USDJPY chart going sane and perfect, then all of a sudden something pops up from the Japanese Central Bank and oops, the market looses it. It leaves me frustrated sometimes.

But nevertheless, I will follow your advice and check the JPY more often.

Thank you
aud/usd is good for training technical trader,

eur/usd is very fundamental and trend biased.

actually all pairs are the same, i would recommend you studying one pair and understand its volatility and behavior. trade it along with dollar index, gold, oil and stocks as reference [ not saying to trade those gold, oil etc, but only to see the co-relation in some sort.
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Quoting 5percent
aud/usd is good for training technical trader,

eur/usd is very fundamental and trend biased.

actually all pairs are the same, i would recommend you studying one pair and understand its volatility and behavior. trade it along with dollar index, gold, oil and stocks as reference [ not saying to trade those gold, oil etc, but only to see the co-relation in some sort.
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Why the AUD/USD? Is there a reason for that certain pair to be good for technical analysis?

But very interesting about the oil and gold, why would you recommend that? Nobody ever referred to them before. I am very interested to know your point of view.

Thank you very much for the time and the sharing.
Hey,

I had also read your post in my journal (will answer it later on).

I think there is no such pair, you should learn how the market behaves, how it's moving and how can you benefit from that knowledge.

I can tell you (from my experience) that all pairs and all markets behave the same according to support and resistance, if I would cover the name of the chart, can you tell it's the EURUSD? or the USDILS?, the answer is no.

So, you need to start learning what makes the market moving, and build your confidence and trading plan from there.

That's how I had started and I think it's the best approach.

If you need a place to begin with, I can suggest a few, just PM me.

Shalom my friend
Quoting Kenawee
Why the AUD/USD? Is there a reason for that certain pair to be good for technical analysis?

But very interesting about the oil and gold, why would you recommend that? Nobody ever referred to them before. I am very interested to know your point of view.

Thank you very much for the time and the sharing.
if you are trading those not so known pairs, their spreads are high. Common pairs are like eur/usd, gbp/usd, nzd/usd, usd/jpy, eur/jpy, aud/usd. exotic pairs like gbp/Nzd, eur/AUD, usd/sgd have higher spreads, and not ideal to trade for beginners.

If you are trading eur/usd, gbp/usd, gbp/jpy, or any exotic pairs, you will likely to get emotional due to higher volatility, if you are not using stop loss, and even if u do, as beginner, your stop is too easily to be taken out.

AUD/USD is some sort of technical pair, it respect support/resistance very well, and if it break it, u will know because of price action, where as crazy pairs like eur/usd may not even give you that slight retracement or chance to cut your wrong position as it can go up and down 100-200 pips in 30mins or even 1-5mins time in heavy fundamental period.

oil and gold are not suitable for beginners to trade, you are merely using them as guide and understanding about risk on, risk off, strengthen of dollar index of weaken.

For example, on the tip point of the news release, gold drop 50-60 points, and eur follow along, you might want to look for shorts on indice/stock/ aud/usd at certain level of resistance, as dollar index is strengthening , all cross pairs are likely to fall as well. just like what happened on friday.

gold is commonly the first indicator, if u see gold spiking up, u might want to go long upon seeing that as well, because usd will be weaken likely, due to inflation / risk on, and oil will shoot up as well etc etc.

u might also want to take note of cac40, dax60, sp 500, dowjones and etc, as these indices reflect whats going on in the market.
so for a new trader what is needed to be know for intra day trading like

For how long to hold one trade
How many pips to target
Which indicators to use
and Which Pivot Points to be used?
Quoting usmanp
so for a new trader what is needed to be know for intra day trading like

For how long to hold one trade
How many pips to target
Which indicators to use
and Which Pivot Points to be used?
All of those questions will be answered when you find a system and setup you feel comfortable with.

Target is usually determined by a risk/reward ratio. If your trades are only producing 50% win rate. You know that your risk reward has to be atleast 1:2. Meaning, you risk 10 pips per trade and target 20 pip return.

This is why demo testing is so important when you do indeed find a system you trust and would like to continue trading.

Best of Luck
Would go with EUR/USD and USD/JPY..
Quoting Naked Trader
I can tell you (from my experience) that all pairs and all markets behave the same according to support and resistance, if I would cover the name of the chart, can you tell it's the EURUSD? or the USDILS?, the answer is no.

So, you need to start learning what makes the market moving, and build your confidence and trading plan from there.

That's how I had started and I think it's the best approach.

Shalom my friend
Good point. Thank you very much.

Lehitraot my dear friend.
Quoting 5percent
AUD/USD is some sort of technical pair, it respect support/resistance very well, and if it break it, u will know because of price action
Oh, if I could only be sure about this fact, I would stick to it for a few months as my main practicing pair.

I will check older charts and check that out. Thank you very much for your recommendation and your time.
usmanp and Forexnuts. Thank you guys for helping.

Quoting fxcatty
All of those questions will be answered when you find a system and setup you feel comfortable with.

Target is usually determined by a risk/reward ratio. If your trades are only producing 50% win rate. You know that your risk reward has to be atleast 1:2. Meaning, you risk 10 pips per trade and target 20 pip return.

This is why demo testing is so important when you do indeed find a system you trust and would like to continue trading.

Best of Luck
Thank you, fxcatty.

I have never tried any of those systems. Do you have a simple one to recommend for beginners like myself? One that doesn't have too many indicators and distractions?

Thank you.
Quoting Kenawee
Oh, if I could only be sure about this fact, I would stick to it for a few months as my main practicing pair.

I will check older charts and check that out. Thank you very much for your recommendation and your time.
learn candlesticks patterns and naked chart first, learn to identify the chart itself without anything pure clean chart is all u need, even after years of trading, all seasoned traders fall back to pure charts,, no indicators, no boilinger bands, nothing all , just use horizontal line is all u need.

beginners should learn to make things simple, by reading price action, and seeing how one candles move to another, what does each candle says about the price itself, and the volatility during different sessions.

after learning price actions with basic support and resistance aka supply and demand, then only u find suitable indicators that are not lagging.

example like ema, sma, but nothing known as what ma cross what ma all are nonsense and delay indicators.

learn about price action candle overlapsing what ma will shows what result, reject what ma will shows what result, don't ever listen or learn about 7 cross 21 etc, all are slow and delayed indicators.

rsi, cci and even boilinger bands are stuff that junked up the charts and myths that the brokers and market wants you to learn.

learn about fibo and trendline, and every fibo rules.

do paper trading seriously if u want to learn. only until you are confident with your system, u laid out the rules and start trading on very small amount like 0.01. then slowly move up once u found consistency and obeying of rules such as stop loss to manage your trading ethics and psychology.

try to visit nial fuller's site, google it, it shares about price action and tips about trading management such as psychology etc.

most beginners failed because they dun have discipline nor rules, and always use the assumption " if only if only if only " but end up blowing all of their live accounts to brokers in a matter of time.
5percent, great recommendations, will use it for myself too.

What about that
Quoting 5percent
most beginners failed because they dun have discipline nor rules, and always use the assumption " if only if only if only " but end up blowing all of their live accounts to brokers in a matter of time.
These assumptions are the conditions of some trading strategy, which trader has, aren't they? I don't understand why is that bad idea. Or are you saying this one related to the topic - choice of pairs to trade?
  • Post #20
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  • Edited 3:49am Nov 6, 2012 12:06am | Edited 3:49am
Quoting meng88
5percent, great recommendations, will use it for myself too.

What about that

These assumptions are the conditions of some trading strategy, which trader has, aren't they? I don't understand why is that bad idea. Or are you saying this one related to the topic - choice of pairs to trade?
it's the fine line between trading - > with discipline and trading system/plan

rogue trading -> with luck and anyhow execution with trader's emotions.

and rogue trading will meet mc and stop call in a matter of time and use the " if only if only i had do this do that "

in fact, currency moves the way it is, against usd against jpy, up down, cross -relation, co-rrelation etc etc. somehow inter-linked, but trading a pair that is technically satisfied would be aud/usd as per my recommendation to him, compared to eur/usd etc. or even jpy pairs.

that's my advice for him.
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