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which currencies to avoid trading?

  • #1
  • First Post: Nov 30, 2010 4:41am Nov 30, 2010 4:41am
Attached are few currencies I am currently demoing them before I decide to trade them live.

So far I trade live the EurUsd as the only currency...which I am very happy with the results.

Not to sound greedy but I would like to expand my options and increase by knowledge as well as my income...well, why not if I do understand/predict the market with good accuracy!

Over the weekend I did some analysis on some currencies with good set-ups and gave it ago. Now I would like to trim it down to 5. Please advice which currencies to possibly avoid.

Cheers,

AJ
Attached Image (click to enlarge)
Click to Enlarge Name: Dailychartcurrency.JPG Size: 118 KB
Time Is Money
  • #2
  • Nov 30, 2010 5:18am Nov 30, 2010 5:18am
all other things being equal, I would avoid anything with a high spread. The defenition of high depends on your strategy. If you scalp for a few pips then 10 pips spread is a lot. If you aim for 1000s of pips it matters less.

Next to that you need to think about correlation between pairs. If two pairs are highly correlated there might be little extra value in trading both pairs.
  • #3
  • Nov 30, 2010 5:25am Nov 30, 2010 5:25am
Quoting MorningMania
all other things being equal, I would avoid anything with a high spread. The defenition of high depends on your strategy. If you scalp for a few pips then 10 pips spread is a lot. If you aim for 1000s of pips it matters less.

Next to that you need to think about correlation between pairs. If two pairs are highly correlated there might be little extra value in trading both pairs.
Thanks mate!
Time Is Money
  • #4
  • Nov 30, 2010 7:13am Nov 30, 2010 7:13am
Generally speaking the GBP and JPY currencies are the most volatile.
  • #5
  • Nov 30, 2010 9:07am Nov 30, 2010 9:07am
Quoting abajiga
Attached are few currencies I am currently demoing them before I decide to trade them live.

So far I trade live the EurUsd as the only currency...which I am very happy with the results.

Not to sound greedy but I would like to expand my options and increase by knowledge as well as my income...well, why not if I do understand/predict the market with good accuracy!

Over the weekend I did some analysis on some currencies with good set-ups and gave it ago. Now I would like to trim it down to 5. Please advice which currencies to possibly avoid....
Depends on your approach. I honestly can say after years of having more than 15 pairs, 5 commodities, 4 indexes and a bunch of companies on my workdesk that I seldomly traded outside of the key currencies EUR/USD, GBP/USD, AUD/USD, USD/CHF and USD/JPY. The only other pairs that would get a mention would be GBP/JPY when it was ready to burst or Silver.

In all honesty, having just 2 timeframes over the course of 30 markets you get yourself in a serious tailspin especially at the beginning and if you trade with indicators and you have defined entry rules you could be adding more to your plate than you need. Besides in most cases you will either be taking trades in 1 direction on correlated pairs, opposite directions (crossed wires and hedging theoretically) or be all over the place.

Focus and master 1 currency pair. Learn it inside and out. Get to know what moves it, take it to bed if you have too and whisper sweet nothings in its ear.

People who are looking for more pairs to trade are just LOOKING to be in the market because they dont want to miss out, instead of TRADING AT THE RIGHT TIME and being in a trade for the right reasons. If this sounds like you, if you are in front of your screen just itching to be in the market because oooohh the big bullish bar geez I cant miss to many of those then your in the wrong mindset and environment.

RT
  • #6
  • Nov 30, 2010 4:12pm Nov 30, 2010 4:12pm
Quoting Razor_trader
Depends on your approach. I honestly can say after years of having more than 15 pairs, 5 commodities, 4 indexes and a bunch of companies on my workdesk that I seldomly traded outside of the key currencies EUR/USD, GBP/USD, AUD/USD, USD/CHF and USD/JPY. The only other pairs that would get a mention would be GBP/JPY when it was ready to burst or Silver.

In all honesty, having just 2 timeframes over the course of 30 markets you get yourself in a serious tailspin especially at the beginning and if you trade with indicators and you have defined entry...
Absolutely wise words from an experienced trader...Thanks alot.
I have so far well educated myself the EurUsd...

I managed to triple my mini live account using that pair only and I am dedicated continuing the same manner as I get 2-3 trades only a day and that happens when the London, US and sometimes Tokyo sessions are open.

Many thanks again
Time Is Money
  • #7
  • Nov 30, 2010 7:03pm Nov 30, 2010 7:03pm
I will second the recommendation that you focus on one currency and master it. After staring at charts for hundreds of hours you start to get a feel for how it behaves given past movements, and this kind of intuition is personally what ended up making me profitable. When I looked at multiple pairs I was constantly itching for an entry and not really learning anything from watching the charts (since I was looking at too many to really *watch* them).
  • #8
  • Dec 1, 2010 1:03am Dec 1, 2010 1:03am
I also want to thank you Razor_trader for your wise post! I am also very new to the forex game and like most newbies I tend to think that I need to trade everything under the sun because of the fear of missing out on many trades or just that my fingers will get itchy if I have to wait for one month for a decent signal if i'm only trading one pair for example. But I just gotta learn to have patience..Otherwise I will never win.

If I may ask abajiga what timeframe are you working with? That picture is named "daily currency chart". So are you trading daily charts?
  • #9
  • Dec 1, 2010 4:23am Dec 1, 2010 4:23am
If your new (less then 2 years consistent study) or unprofitable, trading 1 pair is in the top 3 of smartest things you could possibly do and I'm telling you this from personal experience.

I'f you dont become intimate with a pair, your not respecting her and she will not respect your account.

Quoting Razor_trader
Depends on your approach. I honestly can say after years of having more than 15 pairs, 5 commodities, 4 indexes and a bunch of companies on my workdesk that I seldomly traded outside of the key currencies EUR/USD, GBP/USD, AUD/USD, USD/CHF and USD/JPY. The only other pairs that would get a mention would be GBP/JPY when it was ready to burst or Silver.

In all honesty, having just 2 timeframes over the course of 30 markets you get yourself in a serious tailspin especially at the beginning and if you trade with indicators and you have defined entry...
Annoying Precision
  • #10
  • Dec 1, 2010 8:38am Dec 1, 2010 8:38am
Quoting ariku
I also want to thank you Razor_trader for your wise post! I am also very new to the forex game and like most newbies I tend to think that I need to trade everything under the sun because of the fear of missing out on many trades or just that my fingers will get itchy if I have to wait for one month for a decent signal if i'm only trading one pair for example. But I just gotta learn to have patience..Otherwise I will never win.

If I may ask abajiga what timeframe are you working with? That picture is named "daily currency chart". So are you...
Hello!

To be honest, I personally trade the 30min timeframe. The daily charts is what I am experimenting which seems less time needed to monitor. In the 30min, I get my signal and I then specify both my SL and TP. I Have set up rules, so I only take my profit what the market has to offer.

Cheers
Time Is Money
  • #11
  • Dec 1, 2010 8:57am Dec 1, 2010 8:57am
Quoting erikte279
If your new (less then 2 years consistent study) or unprofitable, trading 1 pair is in the top 3 of smartest things you could possibly do and I'm telling you this from personal experience.

I'f you dont become intimate with a pair, your not respecting her and she will not respect your account.
I believe one currency is enough, especially EurUsd is a good pair with relatively small spread. I am trading for 3 years and every time I study the charts, I learn something everyday.

Plus, interacting with other traders like here in FF gives you that little push you need in trading ;-)

Cheers!
Time Is Money
  • #12
  • Dec 1, 2010 9:47am Dec 1, 2010 9:47am
Quoting abajiga
I believe one currency is enough, especially EurUsd is a good pair with relatively small spread. I am trading for 3 years and every time I study the charts, I learn something everyday.

Plus, interacting with other traders like here in FF gives you that little push you need in trading ;-)

Cheers!
Heres something that can help new traders trade. It is simple, can be done over pretty much any timeframe.

I trade line charts on 15 min through to daily when I have some spare time that is waiting on other things to come through. I do this on the EUR/USD only because it offers

*lowest spreads which for lower time frame breakout trading offers the best chance to get to BE or better
**and has great volume during the london/new york session.

Once you have your line chart, start joining some of the most recent low to low points or high to high points and trade the breaks of these. What your looking for essentially with the low to lows is a lower low, then a high low (upper angle line) which you can short to the downside. Trade the limit break, keep SLs tight and have an exit plan for if your in and in profit.

I have just taken a low-low break to the short side. I got in a 1.3108, added a second position at 1.3091 (the high low horizontal line) and have so far managed to hold all of it till recently 1.3071 where I have taken 75% off the table and moved SLs to Breakeven. An easy 5-10% based on SLs of 20-25 pips which is insane as I close out of we get back above the lines, the SL are there incase there is a freak move in which case I loose out of a full position.

You can pyramid with this method, with your first position being the largest until you have 3-4 positions in a strong move working for you. Indicators are not neccesary. Nothing more than a line chart with a few lines trading breaks can have you easily cutting losses short and having the potential to build a few pyramids that can quickly add up. You can start with a full 1% risk and move down so that your total position is 2-2.5% risk and still make great gains in a strong moving market and being on a small timeframe you can simply move to a higher timeframe to see where there are major targets or you can manage your trade from there once it has matured.

None of this is new and I am sure it is done by countless people. When you overcomplicate things you tend to find there are too many rules to follow and therefore you will not have the discipline to trade them.

*Keep it simple and you will find that you will be able to keep a clean perspective on what is happening.

*Learn to love your losses BECAUSE you keep them small. Always have an immediate exit plan that you follow,

*Have a target for potential profits be it downsizing or complete profit taking.

*Only ever add to winning trades with Smaller and Small lots and never add to loosers (which you shouldnt do anyway because you have an immediate exit plan should the trade not work out as planned)

*Dont inverse pyramid (open with a small lot and add larger lots as the trade goes in your favour, you will soon find that you small position that is up 200 points is hit hard by that last position that is 5 x larger and down 40-50 points

*And enjoy your trading. Enjoy the opportunity that you could do it for a living, that you could potentially make some good money by using your brain and not labouring for it in the hot sun. Take a smile when things work out and have a bigger smile for the discipline you just showed for cutting your loss because it didnt work out, those will save you from self destruction far quicker than you can imagine.

Take care

RT
  • #13
  • Dec 1, 2010 10:28am Dec 1, 2010 10:28am
Quoting Razor_trader
Heres something that can help new traders trade. It is simple, can be done over pretty much any timeframe.

I trade line charts on 15 min through to daily when I have some spare time that is waiting on other things to come through. I do this on the EUR/USD only because it offers

*lowest spreads which for lower time frame breakout trading offers the best chance to get to BE or better
**and has great volume during the london/new york session.

Once you have your line chart, start joining some of the most recent low to low points or high to high...
Once again, that was some generous words from you. I am sure young traders like us would love to learn from an experienced trader like you. This is what I was talking about earlier... we are always learning everyday, and this is the beauty of having helpful traders around giving some good advice and courage to all young trader like myself trying to make some income through forex. That was super yet well nailed example. Many thanks...

Bless you!
Time Is Money
  • #14
  • Dec 2, 2010 1:28am Dec 2, 2010 1:28am
Thank you once again Razor_trader! Again a magnificent post and proves that keeping it simple works! I love how many of the most popular songs and the best and the most beautiful things in life are so simple!

I will be demoing your strategy in the near future! THANK YOU!
  • #15
  • Dec 2, 2010 2:05am Dec 2, 2010 2:05am
Quoting MorningMania
all other things being equal, I would avoid anything with a high spread. The defenition of high depends on your strategy. If you scalp for a few pips then 10 pips spread is a lot. If you aim for 1000s of pips it matters less.

Next to that you need to think about correlation between pairs. If two pairs are highly correlated there might be little extra value in trading both pairs.
It is a common myth, in my humble opinion that the spread matters less if you are trading on higher timeframes (daily, weekly etc).

One of my favorite methods, trades 15 times a year per pair on average, and it wins anywhere from 20-28 pips per trade on average.

Other method I use, but still in testing phase, averages around the same (20 pips per trade) but trades more frequently.

10 pips spread makes both of them untradeable even though they have a strong edge.

Always shop for better spread!

However!

@ the opening person

It is a good idea to calculate a spread v.s volatility ratio when you decide which instrument to trade. You may find that a pair with higher spread (ex GBPJPY) has still a better trade-ability then other with lower spread (NZDUSD, EURGBP). EURUSD is the best choice using this criteria atm. Things may change though.

My choice is the same as Razor. I trade the majors + AUDUSD atm.
You wont survive without preserving!!!
  • #16
  • Dec 2, 2010 2:13am Dec 2, 2010 2:13am
GBP and JPY is the cuurencies that I personally avoid in speculation.
  • #17
  • Dec 2, 2010 2:29am Dec 2, 2010 2:29am
Dear Abajiga,

I assume you are an above average trader. I don't think you need to avoid any currencies in trading. In fact you're better than me by multiple magnitude.

I've calculated you earn 1277 pips just within 29 Nov 2010 proviso I'm not wrong. Interestingly you do not show your time of exit in all trades.

You're really skillfull in speculation, nonetheless I don't comprehend your motives.

As for me, on average I earn 50 pips per day.

Best Regards
Berlin Goh Pei Lim
  • #18
  • Dec 2, 2010 9:42am Dec 2, 2010 9:42am
Quoting abajiga
Hello!

To be honest, I personally trade the 30min timeframe. The daily charts is what I am experimenting which seems less time needed to monitor. In the 30min, I get my signal and I then specify both my SL and TP. I Have set up rules, so I only take my profit what the market has to offer.

Cheers
What signals do you use on the 30M time frame if you do not mind sharing? Thank you.
  • #19
  • Dec 6, 2010 4:35pm Dec 6, 2010 4:35pm
Quoting berlinwong1
Dear Abajiga,

I assume you are an above average trader. I don't think you need to avoid any currencies in trading. In fact you're better than me by multiple magnitude.

I've calculated you earn 1277 pips just within 29 Nov 2010 proviso I'm not wrong. Interestingly you do not show your time of exit in all trades.

You're really skillfull in speculation, nonetheless I don't comprehend your motives.

As for me, on average I earn 50 pips per day.

Best Regards
Berlin Goh Pei Lim
Hello Berlin,

I actually closed all trades except one currency that later came positive as expected with more than 2500 pips in all currencies. As for exiting trades, I use a Fib method which I manually calculate based from specific bars following the trend.

Cheers!
Time Is Money
  • #20
  • Dec 6, 2010 5:06pm Dec 6, 2010 5:06pm
It really depends on your trading style and goals that you have in mind... I trade on daily time frames and trade whatever currency pair I feel that I have a read on no matter the spread.

I've traded 24 pairs since Sept.. Some of my favs are USDHUF, USDTRY and a few other emerging market currency pairs.

You can see my results here and the actual pairs I trade. Currently +40% return with +15490Pips

http://www.myfxbook.com/members/drgo...goodvibe/52322
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