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How Many Pairs for Newbies

  • #1
  • First Post: Feb 14, 2010 7:55am Feb 14, 2010 7:55am
This is my first post here though I have been lurking for some time.

I am fairly new to FOREX, May 2009. I have been paper trading except for a quick attempt at live trading in September with less than favorable results so I went back to paper trading to hone my skills and educate myself further.

One of the things I found that was distracting me was that I was trying to monitor too many pairs. So onto my question.

How do I decide which pairs to focus on? From everything I read when starting out you should only monitor 2 to 3 pairs max. I am assuming it should be the more liquid pairs i.e. EUR/USD, USD/JPY but am not sure and would like to hear it from you more experienced traders.

Thank you in advance for your time.

TJC
  • #2
  • Feb 14, 2010 9:18am Feb 14, 2010 9:18am
Quoting tjc1020
This is my first post here though I have been lurking for some time.

I am fairly new to FOREX, May 2009. I have been paper trading except for a quick attempt at live trading in September with less than favorable results so I went back to paper trading to hone my skills and educate myself further.

One of the things I found that was distracting me was that I was trying to monitor too many pairs. So onto my question.

How do I decide which pairs to focus on? From everything I read when starting out you should only monitor 2 to 3 pairs max. I...
I guess for me the question is what kind of approach are you making to trading.

Are you trading small Timeframes or longer ones.
Are you trading based on indicators or just raw Price Action (pin bars, Inside Bars etc)
How much time is devoted to initial analysis and ongoing analysis.

So from these if you were trading small TFs, looking to get in and out based on Indicators and/or Price action and this required alot of attention then I would say trade 1 cross and make it a low spread cross ie EUR/USD or USD/JPY

If you where trading larger timeframes, such as daily or weekly and you were just trading Price Action around support and resistance. Your analysis was limited to the start of the day with ongoing analysis as needed (managing trades) In this situation you would be ok to trade as many crosses as you could handle because not every day is going to have a trade on a particular cross.

Being new I would limit the 2nd option to the main majors ;

EUR/USD
USD/CHF
USD/JPY
GBP/USD and
AUD/USD

These would give you the bulk of the volume, the better spreads and there is enough there to trade most days..

Work out what best suits you. From there find out the time needed to monitor your system and then work out what you feel you can handle without causing to much stress.

Razor
  • #3
  • Feb 14, 2010 1:26pm Feb 14, 2010 1:26pm
The time of day that you trade needs to be a consideration. If trading the Asian session, maybe you should stick to JPY and AUD pairs. At other times, any of the pairs mentioned by Razor are OK.
  • #4
  • Feb 14, 2010 1:41pm Feb 14, 2010 1:41pm
Quoting Razor_trader
I guess for me the question is what kind of approach are you making to trading.

Are you trading small Timeframes or longer ones.
Are you trading based on indicators or just raw Price Action (pin bars, Inside Bars etc)
How much time is devoted to initial analysis and ongoing analysis.

So from these if you were trading small TFs, looking to get in and out based on Indicators and/or Price action and this required alot of attention then I would say trade 1 cross and make it a low spread cross ie EUR/USD or USD/JPY

If you where trading larger timeframes,...

Razor,

Thank you for your reply it was most informative. Sorry for not giving much information about my trade style as I was not sure what to include in my post and did not want to make it to long with unecessary information.

My personal life is quite busy as my wife and I are both working professionals with my wife also working on a post balaureate program. We have 8 year old twins who also have activities 6 days a week.

So my FOREX time is pretty much limited to after the kids go to bed which is about an hour or so and then if I can squeeze some time in on the weekend maybe an hour or two.

For the last couple of months I have been focusing on price action and pin bars. I have been reading the James16 & the Trade what you see NOT what you expect threads. I have been using primarily 4hr, daily and weekly time frames. I have been using Fibs for support and resistance levels and MACD and RSI for potential convergance and divergance.

So if I have interpereted your reply correctly given my lifestyle, I should not limit myself to just one or two pairs as I may not get into a trade for several days. I should scan the 5 or 6 majors and be more selective in my trade decisions.

Thank you again for your time,

TJC
  • #5
  • Feb 14, 2010 1:55pm Feb 14, 2010 1:55pm
Quoting CodeMeister
The time of day that you trade needs to be a consideration. If trading the Asian session, maybe you should stick to JPY and AUD pairs. At other times, any of the pairs mentioned by Razor are OK.
CodeMeister,

Thank you for your reply and another important piece of information I have left out.

I primarily do trade the Asian session or at least this is where I get my ideas for entries. I am on the East Coast of the USA which is GMT -5.

Generally I will scan the charts before going to bed and set up limit and stop loss orders hoping they will execute over night. If I think something looks especially good I will get in right away. When I wake up I will see if I got into any trades over night and will then decide whether to move stoploss/limits or terminate trade if things look real bad.

Thank you for your time,

TJC
  • #6
  • Feb 14, 2010 6:06pm Feb 14, 2010 6:06pm
Quoting tjc1020
Razor,

Thank you for your reply it was most informative. Sorry for not giving much information about my trade style as I was not sure what to include in my post and did not want to make it to long with unecessary information.

My personal life is quite busy as my wife and I are both working professionals with my wife also working on a post balaureate program. We have 8 year old twins who also have activities 6 days a week.

So my FOREX time is pretty much limited to after the kids go to bed which is about an hour or so and then if I can squeeze...
Pretty much fits my profile. The thing is, depending on what you know, what strategy you employ to trading and how much focus that takes you can essentially trade unlimited pairs and markets.

For example I do my analysis before the week begins, normally on the Sunday evening before the market opens Monday. I check my weekly charts for

Horizontal S/R
DIrection
any previous Price action that may give a BIAS

I check to see where the market is relative to the areas of Support and Resistance.

I then pull up my daily charts. I dont plot anything on this chart, more I eyeball the areas. Once again I look for signs that may indicate direction and possible trade areas.

If I get something on a chart that looks possible to trade in the week I make a note of it, the area and what it is. From that point I will then set some alarms for the area that I am interested in. If the alarm goes off and I am around my computer then I will then go and investigate and make a descision to trade or not trade. If I am not then when I get in I have a look. Once again if I am able to trade it I will otherwise it goes in the EXPERIENCE box. BY that I mean I make a note on it and cross reference it with my initial thoughts, much like a journal.

If you are paper trading or demo trading or trading live it is still very handy to have this to come back to. Even if you missed the chance to trade it it is still experience that helps to solidify your approach which is really what most of trading is about.

That is more or less, in a nut shell, about as difficult as I make my trading. A few strong lines of S/R, some strong PA formations and my entry with my risk parameters. Check, check, check trade

So as you can see, time may be a barrier in terms of actually being able to trade, however it is never a barrier against the learning process.

Razor
  • #7
  • Feb 19, 2010 1:50pm Feb 19, 2010 1:50pm
Quoting tjc1020
This is my first post here though I have been lurking for some time.

I am fairly new to FOREX, May 2009. I have been paper trading except for a quick attempt at live trading in September with less than favorable results so I went back to paper trading to hone my skills and educate myself further.

One of the things I found that was distracting me was that I was trying to monitor too many pairs. So onto my question.

How do I decide which pairs to focus on? From everything I read when starting out you should only monitor 2 to 3 pairs max....
Stick to 1 until you know it well. e/u is a good one and fairly predictable once you get the hang of it. Eur/gbp is expensive but a fairly straightforward mover and decent prof/pip
  • #8
  • Feb 20, 2010 6:15am Feb 20, 2010 6:15am
Quoting pipjunky
Stick to 1 until you know it well. e/u is a good one and fairly predictable once you get the hang of it. Eur/gbp is expensive but a fairly straightforward mover and decent prof/pip
Thank you pipjunky for your time and input.
  • #9
  • Feb 22, 2010 4:56pm Feb 22, 2010 4:56pm
I specialize and only TRADE eur/usd. I only watch the other pair for correlations in terms of movement to confirm my current trade. I feel specializing in one makes me more in tune with how the market moves.

Stace
  • #10
  • Feb 23, 2010 6:28am Feb 23, 2010 6:28am
Quoting Stacey
I specialize and only TRADE eur/usd. I only watch the other pair for correlations in terms of movement to confirm my current trade. I feel specializing in one makes me more in tune with how the market moves.

Stace
Thank you Stacy for your time and feedback.


TJC
  • #11
  • Feb 23, 2010 7:29am Feb 23, 2010 7:29am
Quoting Stacey
I specialize and only TRADE eur/usd. I only watch the other pair for correlations in terms of movement to confirm my current trade. I feel specializing in one makes me more in tune with how the market moves.

Stace
I agree especially if you are newer. when we train new staff and they ask why they are only "allowed" to trade one pair I explain it like having only one spouse.

You know how your spouse is going to react to certain things, how they make decisions, and you pretty well know their routine for the day. But imagine having 5 wives or husbands. It would be mayhem trying to keep track of it all.

Kinda corny but it seems to make sense when explained that way.
  • #12
  • Last Post: Feb 23, 2010 11:30am Feb 23, 2010 11:30am
Quoting pipjunky
I agree especially if you are newer. when we train new staff and they ask why they are only "allowed" to trade one pair I explain it like having only one spouse.

You know how your spouse is going to react to certain things, how they make decisions, and you pretty well know their routine for the day. But imagine having 5 wives or husbands. It would be mayhem trying to keep track of it all.

Kinda corny but it seems to make sense when explained that way.
LOL that is a pretty good analogy, one is enough for me!! haha
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