Safest pair to trade?

What is the safest pair to trade?

I welcome all thoughts and opinions.

There is no safest pair.

Hi SJ,

'Safe' is really only determined by your risk management, not necessarily the instrument you trade.

It's an understandable question to ask but i'm afraid the answer you're after simply doesn't exist.

I thought the safest might be the pairs with the least pip movement or range - like the aud/nzd, eur/gbp, eur/chf, or maybe usd/chf.

It doesn't matter if a pair moves 1 million pips or 20 pips a day. You'd just need
bigger stops. As long as you risk 1% of your account is absolutly makes no difference if a pair moves x or y pips.

Hi SJ,
Well if those pairs have the least movement, you are still going to have to allocate an appropriate value to each pip based on an acceptable 'equity at risk' position.

Conversely, if you choose a pair which has a larger average daily range, you can still trade that pair based on the same fixed fractional equity risk position as with a 'safer' pair, thanks to the granularity forex enables.

I am being slightly presumtious by assuming you take a fixed fractional apporach to your trade management - this is not neseccary and there are many different ways to manage your risk, it's simply how i choose to manage mine.

As an afterthought, while I don't trade the pairs you mentioned, the Swiss Central Bank are infamous for intervening heavily in their currency rate, which in my mind, negates them as a 'safe' pair, as per your definition.

Dan

Edit: TJPLD is obviously quicker on the trigger than me (what he said!)

The only thing that would make a pair safer is if it was more predictable. Well have fun looking for something predictable in the markets.

IMHO, the best pair for which Technical Analysis can be applied to is EUR/USD. My arguments is that there many trading systems that works fine for EUR/USD but fail on other pairs. For beginners it's simpliest to develope a trading system on EUR/USD.

I'd appreciate it if we could all stay on topic.

Why ask the question if you don't want to hear the answer?

Yea agreed with TJPLD that there is no safest pair but Euro/Usd is a pair which is very famous with low spread & its the pair which is traded by almost 80% of traders(Read some where)
You will also find lot of traders specially newbies in Euro/Usd thread...

Oops! I apologize. I meant that post to go under my other thread, where the conversation was beginning to roam.

Again, sorry about that.

Be a man- Go and Trade EUR/USD- The Daddy/The King.

I have seen EUR/USD is the 'heart of the market'. Once EUR/USD makes big moves, market shakes and all pairs move.

All the pairs are connected is different ways, the more important is to have a good money management and adjust it to the volatility of the instrument you are trading.

Everything everyone else has says is true, there is no 'safest pair', that is all down to you.

However, try out Cable (GBP/USD)

Not as volatile as JPY, fairly stable.
Others may disagree with me here, but in my opinion it's a bit "beginner mode".

Take a look for yourself, but that is where I would recommend starting out.

Also, the fact that the Dollar makes up a huge percentage of the market makes it a good currency to specialize in, or so I have learned from Mr Wayne McDonnell =]

I think TJPLD (post #7) sums it up very well.

However, since I look to trade trends, the 'safest' pairs for me are those whose trends are strongest and 'cleanest' (less noise/sideways movement). Hence I trade currencies that are negatively correlated, i.e. the strongest performing currency/ies against the weakest. So if EUR is weak, and CAD is strong, for example, then I'll look for suitable technical setups to sell EURCAD. I explained this in a little more detail here and here. As with all technical trading, we are talking vague probabilities, not certainties.

Everything else being equal, I'll trade the pairs with the lowest spreads, relative to the (approximate) move I'm looking to capture. Spread becomes increasingly significant if one trades the shorter timeframes.

Major pairs (EU, GU, etc) arguably tend to respect technical line studies a little better, probably because more traders trade them; while it's incumbent upon the crosses and exotics to remain 'in step'. For example, the behavior of EG is dictated somewhat by the behavior of EU and GU, rather than the other way around.

I am Canadian, but I like the USDCAD pair for a couple reasons.... although Canada is a huge trading partner with the US and our economies are linked in that way, there are some things that you can watch that can give you some ideas of which way USD/CAD is going to go. Oil and metals price are great for CAD strength. Our Federal bank is likely to raise rates before the US. The US has are will likely continue to see weakness in real estate but Canada does not have near the amount of real estate issues. Be careful if oil price goes down if strike is resolved but still the other things mentioned may still push CAD closer to parity with USD.

I took advantage of over reaction to US Fed announcement on emergency funds rate to short USD/CAD at 1.049. (Ironically I had an alert set at 1.052 to short, but I ignored the message to my blackberry as I was sleeping or didn't hear the alert on Thursday night, but nonetheless went short first thing Friday morning at 1.049.

I think an interesting pair might be the GBP/CAD pair. Big issues in the UK versus relatively strong Canada fundamentals and outlook. However might wait for a short term correction for a buying opportunity. If metals and oil continue to rise, maybe we'll see the GBP/CAD approach 1.50. You never know, but based on fragility of the UK still, might be something to watch.

3 Things that may be key for forex trading success:
Fundamentals
buying opportunities (related to emotions)
Emotions

Example I have long outlook on gold. Buddy called me up on Friday worried about the drop in gold on Thursday evening... I calmly replies, it's just another buying opportunity.

By the way I'm new to this forex trading... we'll see how it goes. One of my strengths I think will be my ability to manage emotions. Regardless, I look at all my trades, winning and losing, and analyze my thought process, emotions, etc to see what I did wrong and what worked. That's probably a big part of it but of course some of it is just the market. We can't control the market, but we can control our emotions.

I don't stick to one pair. I like (what I think are) high probability (simple) set ups and if I stick to one pair I have to jump about time frames to get them. Even then it's not ideal. This doesn't suit my trading style which is substantially based on James16 thread.

I also like to trade the "hot hand". Why wait for days while a pair is sluggish because of impending news? Sometimes the market will give us clues as to which is the hot hand. For example, if the USD seems strong against most currencies except, say, AUD and the Yen is looking weak, do we look at AUD/JPY?

I just realised I have repeated, allbeit a bit crudely, what Hanover so eloquently posted above.

I mostly trade EUR/USD because thats the only pair i watch and more experienced with the safest pair is the one youve had most experience with watching its movements throughout the years... the more you know about how a pair moves the more you will be prepared.