How to pick which pair to trade when getting multiple signals? | Forex Factory

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How to pick which pair to trade when getting multiple signals?

  • #1
  • First Post: Feb 12, 2015 4:57pm Feb 12, 2015 4:57pm
I'm curious how people pick which pair to trade when you get multiple signals on a currency.


Say you trade trend line breaks or support breaks or whatever else you use to generate you buy/sell signal.
And AUDCAD, AUDCHF, AUDUSD get that signal at the same time.


This goes along with my original post about picking pairs with measurements:
http://www.forexfactory.com/showthread.php?t=526344

(Which for some reason someone moved to Commercial Content even though I don't have anything to sell or give, I posted it to discuss the above on picking a pair from multiple signals.
Hopefully, they move it back here where "Trading Discussions" happen. But figured I'd post a new thread would the other one gets lost in the Commercial Content Forum.)


I'm thinking you probably wouldn't take all the trades, you'd probably want to take the move that will move the most, move the fastest, and/or have the best chance of continuing the move.


Do you look at what CAD, CHF and USD are doing to help pick?


Do you use some sort of measurement on CAD, CHF or USD to decide?
  • #2
  • Feb 12, 2015 4:59pm Feb 12, 2015 4:59pm
i pick the one with the highest volatility base on pips- https://www.mataf.net/en/tools/02-01-volatility
  • #3
  • Feb 12, 2015 5:08pm Feb 12, 2015 5:08pm
Quoting PoundTrader
i pick the one with the highest volatility base on pips- https://www.mataf.net/en/tools/02-01-volatility
Thanks for the reply.
It looks like it shows volatility in weeks on that site. So I'm thinking you trade longer timeframes like daily?
  • #4
  • Feb 12, 2015 5:09pm Feb 12, 2015 5:09pm
Quoting Lain
{quote} Thanks for the reply. It looks like it shows volatility in weeks on that site. So I'm thinking you trade longer timeframes like daily?
http://www.myfxbook.com/forex-market/volatility if you register you can pick your currency pair that you trade
  • #5
  • Feb 12, 2015 5:13pm Feb 12, 2015 5:13pm
Quoting PoundTrader
{quote}http://www.myfxbook.com/forex-market/volatility if you register you can pick your currency pair that you trade
Ah cool. So that site give you the volatility for the different timeframes. Thanks.
  • #6
  • Edited Feb 13, 2015 4:36am Feb 12, 2015 5:16pm | Edited Feb 13, 2015 4:36am
Quoting Lain
{quote} Ah cool. So that site give you the volatility for the different timeframes. Thanks.
http://www.easyfreesmileys.com/smile...mileys-349.gif
  • #7
  • Feb 13, 2015 12:08am Feb 13, 2015 12:08am
Hi Lain.

Very good question.

My plan tells me a standard position is 2 % of my capital and to never open more than 2 full independant risks at the same time (4%).

If I have several signals

if I think risks are independant (AUDNZD, USDCAD, and GBPJPY for instance), I will split the risk and open each of them so that the cumulated risk is 4 %.

But if I have something like "be bearish on all eurocrosses", I will open only one trade for 2 %, for obviously, such as signals means the euro is weak, and that is the same risk (ie that euro stopped to be weak ) for every trade.
  • #8
  • Feb 13, 2015 12:37am Feb 13, 2015 12:37am
If you have a history of your trades based on the particular signal/entry system it becomes easy to pick the signals to trade. The history may be in demo or real account . Calculate the % success rate of each pair and accordingly take the trade. The pair with highest win rate should be taken first.
Striving to Develop & Implement Innovative Ideas
  • #9
  • Feb 13, 2015 1:36am Feb 13, 2015 1:36am
AUDCAD, AUDCHF, AUDUSD

if you want to just trade 1 out of 3 possible trades, you ask youself

"Which of CAD CHF and USD is the weakest/strongest right now?" If you see a strong AUD you want a weak accompanying pair, and if you see a weak AUD you want a strong accompanying pair.
  • #10
  • Feb 13, 2015 3:33am Feb 13, 2015 3:33am
Hi Lain. I'm not sure how much research you have done into currency strength. I have been researching currency strength for quite some time now (mostly concentrating on Daily timeframe).

I have found that currencies strengthen or weaken in semi-predictable cycles. (The market is not random after all!!)

I have developed some simple indicators in excel that show me when a currency has a high chance to strengthen or weaken. I use these to make decisions on which currencies to trade against each other.

If you have programming skills (I don't unfortunately so have to do everything manually) you could research how currencies change overtime. You might be surprised by how some of their movements give repeated and predictable patterns.
  • #11
  • Feb 13, 2015 7:59am Feb 13, 2015 7:59am
Quoting stefcio2002
But if I have something like "be bearish on all eurocrosses", I will open only one trade for 2 %, for obviously, such as signals means the euro is weak, and that is the same risk (ie that euro stopped to be weak ) for every trade.
Hi Stefcio,

So if you have something like "be bearish on all eurocrosses" and you only open one trade for 2%.
I'm assuming you'd want to trade the one that has the best chance of moving the most or fastest.
Which probably means you'd want the currency that's trading the strongest against the euro (and other currencies).

How do you select which eurocross to trade? Do you have some measurement to go by that gives you a guide on which eurocross to trade.
  • #12
  • Feb 13, 2015 8:00am Feb 13, 2015 8:00am
Quoting New-Pragati
If you have a history of your trades based on the particular signal/entry system it becomes easy to pick the signals to trade. The history may be in demo or real account . Calculate the % success rate of each pair and accordingly take the trade. The pair with highest win rate should be taken first.
Hi New-Pragati,

Makes sense. Thanks.
  • #13
  • Feb 13, 2015 8:07am Feb 13, 2015 8:07am
Quoting jwlee7ucla
AUDCAD, AUDCHF, AUDUSD if you want to just trade 1 out of 3 possible trades, you ask youself "Which of CAD CHF and USD is the weakest/strongest right now?" If you see a strong AUD you want a weak accompanying pair, and if you see a weak AUD you want a strong accompanying pair.
Hi Jwlee,

I was curious if there was some measurement/indicator you use to gauge the strength of the accompanying pair?
Or do you just check through some of the accompanying pairs charts to see how it's doing against other currencies?
  • #14
  • Feb 13, 2015 8:13am Feb 13, 2015 8:13am
Quoting Zondervan
Hi Lain. I'm not sure how much research you have done into currency strength. I have been researching currency strength for quite some time now (mostly concentrating on Daily timeframe). I have found that currencies strengthen or weaken in semi-predictable cycles. (The market is not random after all!!) I have developed some simple indicators in excel that show me when a currency has a high chance to strengthen or weaken. I use these to make decisions on which currencies to trade against each other. If you have programming skills (I don't unfortunately...
Hi Zondervan,

I've looked a bit into currency strength and weakness. That's how I came across the Russian indicator Complex Common (I even read through tones of Russian translated threads about it, thank you Google Translate )

When you talk about "cycles" and "change overtime" are you talking about time base like certain times of the year. Or cycles like Waves?
  • #15
  • Feb 14, 2015 1:59am Feb 14, 2015 1:59am
Quoting PoundTrader
i pick the one with the highest volatility base on pips- https://www.mataf.net/en/tools/02-01-volatility
Me too. Though I don't care for pips too much after that.
  • #16
  • Feb 15, 2015 1:54am Feb 15, 2015 1:54am
Quoting Lain
{quote} Hi Zondervan, I've looked a bit into currency strength and weakness. That's how I came across the Russian indicator Complex Common (I even read through tones of Russian translated threads about it, thank you Google Translate ) When you talk about "cycles" and "change overtime" are you talking about time base like certain times of the year. Or cycles like Waves?
Hi Lain, when I talk about cycles, I am talking about ranking Daily currency strengths and viewing their behaviour over many days.

For example, last week we finished each day (17:00 EST) with these currency rank orders: (btw I don't monitor or trade CHF)

Mon Close 1.NZD 2.AUD 3.CAD 4.JPY 5.EUR 6.USD 7.GBP
Tue Close 1.GBP 2.USD 3.EUR 4.NZD 5.AUD 6.JPY 7.CAD
WedClose 1.EUR 2.USD 3.GBP 4.CAD 5.NZD 6.AUD 7.JPY
Thu Close 1.JPY 2.GBP 3.NZD 4.CAD 5.EUR 6.AUD 7.USD
Fri Close 1.CAD 2.JPY 3.NZD 4. AUD 5. USD 6. GBP 7. EUR

I have a developed an indicator in excel using this data and playing around with averages that gives me pretty good results.

But just looking at this list- what patterns do you observe?

To me just by looking at this list, I have found that USD has a 70% chance of beating JPY at Monday close (17:00 EST). In other words I predict the Monday Daily USDJPY candle will close higher than it opens. I base this purely on probabilities and observation of currency strength ranks over the past few months. I am hoping that one day, I will be able to predict the market with 80-90%+ accuracy just by observing their currency rank order.
  • #17
  • Feb 15, 2015 7:50pm Feb 15, 2015 7:50pm
Quoting Zondervan
{quote} Hi Lain, when I talk about cycles, I am talking about ranking Daily currency strengths and viewing their behaviour over many days. For example, last week we finished each day (17:00 EST) with these currency rank orders: (btw I don't monitor or trade CHF) Mon Close 1.NZD 2.AUD 3.CAD 4.JPY 5.EUR 6.USD 7.GBP Tue Close 1.GBP 2.USD 3.EUR 4.NZD 5.AUD 6.JPY 7.CAD WedClose 1.EUR 2.USD 3.GBP 4.CAD 5.NZD 6.AUD 7.JPY Thu Close 1.JPY 2.GBP 3.NZD 4.CAD 5.EUR 6.AUD 7.USD Fri Close 1.CAD 2.JPY 3.NZD 4. AUD 5. USD 6. GBP 7. EUR I have a developed an indicator...
So there is someone who thinks the same as i am out here. I've been observing this for quite a while and i do about close to 30-40% accuracy now, not as good as i would love to. I believe this needs to be combined with other analysis to make it work better.

Just my 2 cents worth
  • #18
  • Feb 15, 2015 10:00pm Feb 15, 2015 10:00pm
Quoting Lain
I'm curious how people pick which pair to trade when you get multiple signals on a currency. Say you trade trend line breaks or support breaks or whatever else you use to generate you buy/sell signal. And AUDCAD, AUDCHF, AUDUSD get that signal at the same time. This goes along with my original post about picking pairs with measurements: http://www.forexfactory.com/showthread.php?t=526344 (Which for some reason someone moved to Commercial Content even though I don't have anything to sell or give, I posted it to discuss the above on picking...
Hi Lain,

There are few ways you can go about it

1) You can divide your risk among the pairs that provides a trading setup. E.g. if you risk 2% a trade, split 1% into 2 different trades instead.

2) You can use relative strength to decide which pair is more likely to move further. Likewise relative strength also gives you a clue as to which pair is stronger/weaker.

You can check out this post here for a clearer explanation on relative strength.

Hope that helps!

fartist
Whether you can or you can't, you are both right.
  • #19
  • Feb 16, 2015 11:21am Feb 16, 2015 11:21am
Quoting Lain
I'm curious how people pick which pair to trade when you get multiple signals on a currency. Say you trade trend line breaks or support breaks or whatever else you use to generate you buy/sell signal. And AUDCAD, AUDCHF, AUDUSD get that signal at the same time. This goes along with my original post about picking pairs with measurements: http://www.forexfactory.com/showthread.php?t=526344 (Which for some reason someone moved to Commercial Content even though I don't have anything to sell or give, I posted it to discuss the above on picking...
If the signals are from the same time frame, say the daily chart, the it would probably be better if you bring into play more time frames, say hourly, 4-hourly, weekly etc. Now if you still have more than one strong signal, then I suggest the best thing is to take all. My view. Happy trading!
  • #20
  • Feb 16, 2015 8:14pm Feb 16, 2015 8:14pm
Quoting cheater
{quote} So there is someone who thinks the same as i am out here. I've been observing this for quite a while and i do about close to 30-40% accuracy now, not as good as i would love to. I believe this needs to be combined with other analysis to make it work better. Just my 2 cents worth
Hi Cheater, I would be interested in your observations. Today I see NZD weakness coupled with 70% chance EUR will beat USD by today's close. So to me a good setup would be BUY EURNZD. What does your analysis tell you?
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