If you had to trade only six pairs what would they be?

On the one hour if you had to trade only six currency pairs which ones would they be?

the six majors

the ones that are trending the most.

eu gu nu au uj uc

eurusd eurjpy gbpusd gbpjpy audusd usdjpy

I find them very good

The ones you know best. Actually I would tend to stick to only one in the beginning.

You are asking for part of my secret sauce.

Truly, it is not a dark science and just a little study will uncover the 'secret' to making them work.

What I find interesting is that your question focuses on six (6) pairs. Not three (3), or ten (10), but six (6). This tells me that either you have found the answer to the question already and are now looking for some kind of confirmation, or that you have guessed at something out of pure intuition. Either way, you do have at least the number of pairs correct, if that's any consolation.

Six (6) is definitely the right number.

I would trade the six pairs that are being moved by the market for whatever reason.

There are moves to be found in all the currency pairs. If you have a handle on things in Mexico, which is likely to result in depreciation of the Peso, do you sit on the sidelines while USD/MXN races through the handles, because it's not on your list? Should the opportunities afforded on a high interest rate pair like USD/TRY be foregone because it's not a major?

Just some thoughts,
xXTrizzleXx

im about to uncover your secret..............

gbp/USD, eur/USD,aud/USD
USD/jpy, USD/cad, USD/chf

--------------------USD-------------------------where is this currency going. and you can guess where the six are going

deviation in correlation, offers a clue, some lagg, some go first,
who is dumping dollars?

oh no!!!!

here is some more secrets

GOLD, SILVER, commodities, OIL all priced in USD (how strong is the USD today offers clue on what will happen in the currency market)

commodity currencies AUD, CAD, NZD (they usually follow appreciation of commodities)

major stock market and futures = sentiment
CHF (perceived safe heaven)

the six correlate in movement the dollar marks the step.
(beware of the occasional step in the toes (when one breaks pattern something is odd, when they all move together, movement is pretty clear)

if the USD is moving south

what will happen to ANY currency trading against the USD?
USD/MXN (i bet it will move down just a wild guess)

you want crosses? USD/X vs USD/y = x/y so COMPARE how they trade vs the dollar - that signals the move in x/y

the RESERVE CURRENCY OF THE WORLD look at my signature

Not quite - but an interesting mix nonetheless.

GBPUSD and EURUSD, often times are highly correlated with GBP having as much as an average of 1.6 times the Magnitude of the EUR against the USD. If they have a high positive correlation coefficient, and I got caught in the wrong direction, then there goes the neighborhood. However, USDJPY is a good off-set combined with those two mentioned above, but USDCAD does not offer enough horsepower when compared to those three above it.

When doing correlation trading, you've got to match the Magnitude of the pairs, as well as getting the correlation coefficients correct. Today, I had three (3) pairs lose money and three (3) pairs make money, but because I had good Trade Signals for direction and good Magnitude coverage across the realm of pairs used, I was net positive on the day. A day which really was a poor performance day.

I like it when I can trade poorly and still net positive. Winning with your C+, or B- game, is really comfortable. In this business, if you trade single pairs, you really do need your A game. I can go either way, but I'm working on making the multi-pair correlated strategy more profitable. Its just as accurate, if not more than single pair trades, but the profits are lower given the fact that somebody in the basket has to fail, in most cases.

I don't like using Stops or Limits, with the multi-pair strategy, so the weighting (lots used), magnitude and pair mix needs to be good. Hopefully, I'll be migrating more margin to this form of trading in the future - I like the non-directional nature of the aggregate trade, although each pair in the basket does have a specific directional trade signal. Its not cheating (yet), but its getting close to it. It will take more time to optimize its performance.

The only hint I'll give is that it has something to do with the GDP of nations. That's pretty much all I'm revealing. The rest resides in the trade signal driven by my system. The signal has to qualify the pairs used as well.

With spreads ranging into the billions and trillions of pips, that's some pretty expensive shopping there on your list.

Too rich for my blood on the spread. I need to keep my costs lower than that because I'm only in the market for a hot turn anyway. Some of that stuff is so ridiculously priced by the larger players, that it yields precious little per pip value return on the margin used to take the position. Right, now, some of the MXN stuff has widened out to 500 pips. Much of that stuff is highway robbery and gives a new meaning to the term: negative expectancy (of course, I know it is the weekend).

1. In order to be able to get some profits you should only trade with the majors!

I guess it depends on your scale of trading. If the spread is larger than the opportunities your edge uses to profit from the market, then I'd be inclined to think as you do.

However, there are ways to profit from these currencies that use methodologies which make the spread but a small fraction of the trade size. Spreads are only a function of liquidity - should they stop you from taking a trade with valid premises?

But if your method is reliant on the spread, then I guess yes this should be taken into account. What I'm getting at here is unless your method of approaching the markets relies on the spread, using that alone is a poor excuse to justify not exploring what it has to offer.

Do you realize that I can make the same argument for AUD/USD and all the AUD/XXX crosses, and by extension, any currency and its crosses? How this is a secret eludes me...

Surely you jest...

Regards,
xXTrizzleXx

Depends on trading style as well. I trade two methods (both intraday, basically PA/momentum based).

On 5min TF, I trade 4 pairs only: eurusd, gbpusd, audusd and eurjpy: tight SL/TP (no more than 20 pips) and 1:1R always. It's the "Flag trading" method from the Systems thread here on FF. Clear swings and tight spreads are mandatory for this kind of trading. These pairs provide most opportunities for me.

On the hourly TF, I trade 6 pairs with my own method: eurusd, gbpusd, audusd, nzdusd, usdjpy, usdchf. I don't use crosses here since (frequently multiple) entries are based on usd / risk aversion sentiment of the moment. My approach is probably similar to what the redlion talked about. Originally I had usdcad in this usd-based basket but I swapped it with nzdusd giving me more clear trading opportunities and more "hints", particularly to the aud.

If I should position trade trends on higher TFs, I would consider choosing the pairs due to the relative weakness/strength of particular currencies, as described by hanover in his several (always excellent) posts. And I would re-evaluate the list from time to time. This makes great sense imo.

In any case, EU and GU are "evergreens" and their tradeability among currency pairs seems to be most constant over time, on every timeframe.

the ones with the highest volatility.

right now, that would be

eur/nzd
gbp/jpy
gbp/chf
and
eur/jpy

i would say gbp/nzd but i can't find. it doesn't matter to much about what TF or anything. i'd do spot gold and maybe silver too. or I will be once i get to a broker that has it. right now i'm with mbt because the spreads are lower but they're missing the gbp/nzd that thing moves on average 230 pips a day right now! a trend trader's dream! if it doesn't move enough, i don't care what it is, more room for it to just channel. i don't scalp or channel trade so that's what i pick.

1. NZD/USD
2. AUD/USD
3. EUR/NZD
4. EUR/AUD
5. EUR/CAD
6. GBP/NZD

I fancy NZD and AUD pairs as they're the strongest G8 pairs with the highest Interest Rates.

Put NZD and AUD against other low interest currencies can benefit and profit greatly.

The only problem with these two currencies, their considered to be very expensive to trade. In many cases, its common to experience 10-16 pip spread on NZD and AUD crosses.

If I had to trade 6 pairs it would be the majors

Depends entirely upon your strategy.

Aud/usd
Nzd/usd
Euro/usd
Gbp/usd
Usd/chf
Usd/jpy

NOT USD/CAD

The only true cross currencies. Everything else is just a derivative of these.