Favorite pairs. Why? How many?

Lately I've been trading about 7 pairs. That's just to much for me, I thought I can handle them all but I can't, so I thought of going down to 4 pairs.

My choice:
1. EURUSD
2. USDJPY
3. EURCHF
4. USDCAD

Imo the most important factor for choosing those pairs is their loose correlation.

I think that in the long term, loose correlation between the pairs one is trading is the most important factor (related to pairs choosing).

This is open for discussion so please people share your pairs knowledge .

Have a nice weekend everyone!

-soso

you've highlighted the key issue here - correlation.
here is an technique i've used in the past:

1. pick a usd major - any will do - but i would consider the eurusd or gbpusd for spreads and coverage.
2. let's say we picked eurusd, then we have three pairs left over: chf, gbp and jpy. combine any of the two for your next choice. so we could have chfjpy or gbpjpy. let's pick gbpjpy.
3. take the first unit of eurusd & gbpjpy to get eurgbp. if you picked chfjpy in step 2 you would have eurchf here.

so that gives us in this example eurusd, gbpjpy and eurgbp.

4. you could try a fourth with the chf combining with gbp and eur to give either gbpchf or eurchf. but 3 could be enough to start with.

right so we've considered the majors, how about the minors or exotics?

for the minors we have aud, cad & nzd - commodity pairs. you could try for a usd combo or look at perhaps the eur or gbp to add perhaps 3 more pairs. so you could do perhaps audusd, nzdjpy & eurcad for example using rules similar to the above.

once you have all your pairs check out the correlations at:
http://www.mataf.net/en/ or www.dailyfx.com

or even better work them out yourself with the correl function in a spreadsheet using the close of daily data.
see article:
http://www.investopedia.com/articles.../05/051905.asp

have fun!

ok my choice is:
1. eurusd
2. eurjpy
3. eurgbp
4. eurchf
(5. sp500)

i know the last one is an index! :

i can't get mataf working on firefox but last time i looked eurusd & eurjpy had a +60% correlation (bit high i know). i think eurusd vs gbpjpy was about the same +59%.

eurusd vs eurchf was +30, eurusd vs eurgbp was (i forgot)..eurchf vs eurgbp +74 (over 60 threshold).

eurjpy vs eurchf & eurgbp was quite low.

so in terms of spreads (on oanda) and correlation i think it's pretty good...it's not quite what i said in the earlier post but that's where i started from.

Gbpusd

Eurjpy

Nzdusd
Usdcad
Eurgbp
Usdjpy

what's the correlation between usdjpy & usdcad?

i think to follow about four pairs is a good size as well...less is boring and more is too much hassle.

i think the worst thing you can do (and what most people start off with) is follow all four usd majors, so you get two highly positive and highly negative correlations that you have to be careful of...

In the past I used to trade many pairs like NZDJPY, AUDUSD, GBPJPY, CADJPY, EURJPY and the list goes on....

but lately I have decided that i wanna go for less much much less as I am trying to concetrate on the pair , watch it closely , know how it reacts to cerating factors and with what speed...

for now I am trading EURUSD and USDCAD....

EURUSD i find mostly straight forward and movements average of 100-150 tops pips...
USDCAD untill the recent fall at 1.10 levels I found the dear loonie quite predictable and always ranging nomatter what the move was...i ALWAYS made money out of it...always buy it at lows never sell it...i was basically going against the downward trend..it seemed to work...untill the last 2 months that started to fall like there was no tommorow and so i am more cautious with it...still buy it at lows but with tight stops and small profits...

GBPUSD was my favorite untill i had bad experience when I started forex trading couple of years ago when i almost burned my account because of its crazy and volatile movements(i didnt know then...) however good neews i survived the chop(some trading skill, MAJOR AMOUNT OF LUCK) and i vowed i SHALL never touch it again....well i have obviously suince then(its like alcohol and fags isnt it...yeah i will quite....hmmmm...yeap right!!! hehe)but i try to be very conservative when i deal with the pair and always trade it on something major that affects the country....

That's one reason why I have chosen GBPUSD and EURJPY for my system.

these pairs are not linked to each other. Statistics shows this too. For example yesterday EURJPY was winner and GBPUSD loser. Today GBPUSD winner and EURJPY at BE

I trade now only GbpUsd. I like it for big range movements. Its maybe more risky, but also more profitable, but mostly I think is easier to identify movements.
regarding news, I trade them generally on all major pairs.

I've only traded EUR/USD and like trucco, I agree that it's easier to follow the movements when only tending to one. Maybe I'm losing out by trading only one pair, but in doing so I've really made a relationship with it in a sense. All my focus and study is on one pair and I believe I make the best decision that I can because of that.

On the other hand, I've considered opening up to another pair to take advantage of times of uncertainty or lack of activity in my pair of choice.

Mine:

1) AUDUSD
2) EURJPY
3) GBPUSD
4) USDJPY

I'm already thinking of scrapping USDJPY because it seems to move inversely with GBPUSD.. I'm now looking to scrap USDJPY.

Thanks for sharing your tips Iso. I'll go start from there when I do some changing of seats.

Hi FCX Investments, yes I agree that generally, especially for junior traders is good to know well one pair behaviours. Buu I also meant that gbpusd movements are easy to understand, and when you catch the movemnt you probaby are still in time to get some pips. For instance: if in a specific moment eurusd moves up of 10 pips in few seconds, gbpusd moves of 20 or more pips in the same time. So if you consider the also the spread, before you relize the moment in eurusd and you take away the spread meaybe you can catch 2 pips.. with gbpusd probably you can catch also 10 or more pips. (Is just an example).
Just my idea

My all time favorite is GBPUSD hence the title under my name...

I also will pickup the USDCAD and AUDUSD and sometimes USDJPY

But it is just so much less complicated to follow just cable and that is where the pips are...

Scott

I believe the pips is where the best setups are and if you trader on slower moving charts, you can more easily monitor several pairs. If you are very active during the trading day going in and out multiple times, then sticking to 2-3 pairs can be a good idea. It really depends on your trading style I think. I monitor around 10 pairs on the slower charts such as daily and weekly and I follow USD/CHF, USD/CAD and EUR/JPY closely during the day.

is there a way to record the correlation between the currencies and gold/oil. wish i could put it on the same chart, like chf/gold and cad/oil

Thanks for the links Iso!

Ok, after checking out correlations table it looks like I'll make a change. I'll ditch USDJPY and get EURJPY. EURUSD and USDJPY are much more correlated than EURUSD and EURJPY. Also, EURJPY and my other choices are ok, not much correlated.

My updated pairs:
- EURUSD
- EURJPY
- EURCHF
- USDCAD

-soso

I trade four pairs:
EUR/USD
USD/CAD
EUR/JPY
EUR/GBP

I would recommend in this order:

1) USDJPY - JPY is the "home" currency for the Asian session so this should be your main focus and hence major, then:
2) EURGBP
3) GBPCHF

That should be OK for starters, then perhaps add 1 more from the minors list:
4) AUDNZD, CHFCAD, etc or pick a USD minor that correlates weakly with USDJPY.

For Asian traders at least one AUD or NZD pair might be good.

For all traders that just follow the dollar, it might be worth reading:
http://www.investopedia.com/articles...rencyCross.asp

Check out the forex section there for more ideas as well.

I think you have too much dollar exposure. I would go:

GBPUSD
EURJPY

or

EURUSD
GBPJPY

for your first two, then:

EURCHF or EURGBP or GBPCHF,
AUD OR NZDUSD

then pick a commodity cross from CAD, CHF, AUD & NZD.

Hey Soso!!!

Your list is nearly lke mine (well the first 3 anyway)!

Actually I might dump EURCHF for GBPCHF so that I have for forex:

EURUSD
EURJPY
EURGBP
GBPCHF

So after my current eurchf trade I will pull the plug on this pair.