How do you choose what to trade? | Forex Factory

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How do you choose what to trade?

  • #1
  • First Post: Edited Aug 12, 2022 2:42pm May 3, 2016 2:34pm | Edited Aug 12, 2022 2:42pm
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  • #2
  • May 3, 2016 3:43pm May 3, 2016 3:43pm
I choose the major Forex pairs as they generally speaking have more volume. This in turn usually reduces the spread. Simple as that - and I will trade any time, any place!

I also trade the Dow futures, and looking into a few more futures markets, as I find them quite good. I have traded metals before as well, but the position sizes are what I don't like about them... but will probably go back to them.

There is very few differences in most pairs/stocks/metals/commodities/futures for my strategy... a chart is a chart, and it moves in a certain way some of the time, which is when I can profit.
  • #3
  • May 3, 2016 3:51pm May 3, 2016 3:51pm
Quoting rolandW
I choose the major Forex pairs as they generally speaking have more volume. This in turn usually reduces the spread. Simple as that - and I will trade any time, any place! I also trade the Dow futures, and looking into a few more futures markets, as I find them quite good. I have traded metals before as well, but the position sizes are what I don't like about them... but will probably go back to them. There is very few differences in most pairs/stocks/metals/commodities/futures for my strategy... a chart is a chart, and it moves in a certain way...
Thanks for the input rolandW.

I've been somewhat doing as you're doing but I'm currently picking low-spread pairs to trade and that's pretty much it. From what I've seen, currencies, XAU, and XAG seem to work well for me and I would like to look at indices but I don't know which indices are popular to trade so I haven't looked at them much. I'm only trading the 15 minute time frame which is why I'm trying to shop around for other pairs to trade so there's plenty of opportunities.

On the other hand, I definitely like the idea of trading just one pair but on various time frames but there are too many options. I would prefer that pair to be EURCHF but GBPJPY seems to be the popular one on this forum.
  • #4
  • May 3, 2016 3:57pm May 3, 2016 3:57pm
Quoting ohyeah
{quote} Thanks for the input rolandW. I've been somewhat doing as you're doing but I'm currently picking low-spread pairs to trade and that's pretty much it. From what I've seen, currencies, XAU, and XAG seem to work well for me and I would like to look at indices but I don't know which indices are popular to trade so I haven't looked at them much. I'm only trading the 15 minute time frame which is why I'm trying to shop around for other pairs to trade so there's plenty of opportunities. On the other hand, I definitely like the idea of trading just...
​Personally I made a decision to stay away from CHF - last year there was a mini crash on the CHF (and when I say mini, it wiped out a lot of trader's accounts..) because the currency was rigged. I don't think that the CHF has really recovered, so I would stay away from it. Not to say that it could not happen to any other, but slightly unlikely to happen on the EUR or USD pairs, simply because of the trading volume.
  • #5
  • May 3, 2016 4:11pm May 3, 2016 4:11pm
Quoting rolandW
{quote} ​Personally I made a decision to stay away from CHF - last year there was a mini crash on the CHF (and when I say mini, it wiped out a lot of trader's accounts..) because the currency was rigged. I don't think that the CHF has really recovered, so I would stay away from it. Not to say that it could not happen to any other, but slightly unlikely to happen on the EUR or USD pairs, simply because of the trading volume.
Yeah, I know what you mean. There was a time where I vowed to stay away from CHF crosses too. Oddly, the CHF crosses work just as well for me.

My question to you is, what if those people used a stop loss in those trades that wiped out their accounts? Are you essentially saying that even a stop loss wouldn't have helped them in a live environment, in that rigged or not rigged situation?
  • #6
  • May 3, 2016 9:47pm May 3, 2016 9:47pm
Every weekend, I calculate 20 day average trading range (daily high minus low) of 28 pairs. This data, along with the margin required and tickvalue of each pair, gives me the best 6 pairs to trade next week, that will give the most return on investment.
  • #7
  • May 3, 2016 10:12pm May 3, 2016 10:12pm
Quoting GnWFx
Every weekend, I calculate 20 day average trading range (daily high minus low) of 28 pairs. This data, along with the margin required and tickvalue of each pair, gives me the best 6 pairs to trade next week, that will give the most return on investment.
Seems like a sound method. I've tried many of those methods. At the end of the day, I'm just going to trade whatever pair has low spreads and gives me decent entries with my fixed stop.
  • #8
  • May 4, 2016 3:37am May 4, 2016 3:37am
Quoting ohyeah
{quote} Yeah, I know what you mean. There was a time where I vowed to stay away from CHF crosses too. Oddly, the CHF crosses work just as well for me. My question to you is, what if those people used a stop loss in those trades that wiped out their accounts? Are you essentially saying that even a stop loss wouldn't have helped them in a live environment, in that rigged or not rigged situation?
​Stop loss would not help in these situations. The Stop loss for a start8ing point is not guaranteed, so in high volume trading, with low spreads, you can still get a worse stop than what you put down/expected.

Gaps are a whole other ball game - basically if you were long and have a stop at say 10000 and on Friday evening the market closes at 10001. If there was a gap down to 9000 on the market open, you would lose 1001 pips... So if you were $500 up, with 1 pip to your stop out, come the market open, you could be looking at a $501 loss!!!

I talk from personal experience with gaps in the market and holding over the weekend... it is a double edged sword though, as the market can gap the other way and you make big profits...

With regards to the CHF, longs would crucified, shorts were rewarded handsomely! Not a particularly nice way to go about making money though... Glad I didn't have anything in the CHF at that point!
  • #9
  • May 4, 2016 10:06am May 4, 2016 10:06am
People will disagree with me, but I think it's best to pick a single pair, maybe two pairs at the most, that have a low spread, lots of movement, and a high enough average true range so you can actually make decent money trading it. The advantage of trading just the one pair is that you can really get to know it as all pairs tend to have their own personalities. That said, you should be able to apply your strategy to any forex pair or market in pretty much the same way.

Personally, I trade the Dax and Dow, and if I trade a forex pair, it's always GBP/JPY, which has big moves and a reasonable spread. If you are new to trading, then best not to start with these as they are pretty volatile, but ultimately, you will want to trade the pair or index which gives you the greatest number of opportunities to make money, and be afraid of nothing. In forex, it's far better to be a master of one, than a jack of all.
  • #10
  • May 4, 2016 10:32am May 4, 2016 10:32am
Quoting cat
People will disagree with me, but I think it's best to pick a single pair, maybe two pairs at the most, that have a low spread, lots of movement, and a high enough average true range so you can actually make decent money trading it. The advantage of trading just the one pair is that you can really get to know it as all pairs tend to have their own personalities. That said, you should be able to apply your strategy to any forex pair or market in pretty much the same way. Personally, I trade the Dax and Dow, and if I trade a forex pair, it's always...
I think it is perfectly fine to choose one or two. The only thing that matters is whatever you do you get green pips!

It depends on how hands on you want to be and the timeframe you are trading on- trying to monitor 10 pairs on the 1m is pretty difficult!!!
  • #11
  • May 4, 2016 11:23am May 4, 2016 11:23am
Quoting rolandW
{quote} I think it is perfectly fine to choose one or two. The only thing that matters is whatever you do you get green pips! It depends on how hands on you want to be and the timeframe you are trading on- trying to monitor 10 pairs on the 1m is pretty difficult!!!
Oh sure, it does depend very much on the time one has available to trade, and on the time frame one uses. The bigger the time frame, the more pairs one can trade and vise versa.
  • #12
  • May 4, 2016 11:49am May 4, 2016 11:49am
Thanks rolandW and cat for the insights. I definitely see the value in both approaches and, I'm still deciding. More than likely it's going to be a hybrid of both. I'll try to narrow things down to 5 to 10 pairs but only on 1 time frame.
  • #13
  • May 4, 2016 12:40pm May 4, 2016 12:40pm
According to this: https://www.lmax.com/blog/business-a...urrency-pairs/

Only 6 first pairs are worth trading, because support and resistance levels will be real.

In case of let's say AUD JPY you will get price reaction from surprising places which are sum of AUD USD + USD JPY price action. This is what I noticed when trading crosses, they react to S/R, round numbers of the majors.
Cut short your losses. Let your profits run on. David Ricardo (1772-1823)
  • #14
  • May 4, 2016 12:53pm May 4, 2016 12:53pm
Quoting Ramadas
According to this: https://www.lmax.com/blog/business-a...urrency-pairs/ Only 6 first pairs are worth trading, because support and resistance levels will be real. In case of let's say AUD JPY you will get price reaction from surprising places which are sum of AUD USD + USD JPY price action. This is what I noticed when trading crosses, they react to S/R, round numbers of the majors.
Thanks for that Ramadas, which pairs specifically? From my glance at the article, they're stating some statistics about some pairs but not really picking ones worth trading.
  • #15
  • May 4, 2016 1:16pm May 4, 2016 1:16pm
First six from the top are worth trading. Also please learn about mathematical connection between crosses. http://www.forexfactory.com/showthread.php?t=565244
Cut short your losses. Let your profits run on. David Ricardo (1772-1823)
  • #16
  • May 4, 2016 1:22pm May 4, 2016 1:22pm
Quoting Ramadas
First six from the top are worth trading. Also please learn about mathematical connection between crosses. http://www.forexfactory.com/showthread.php?t=565244
Thanks for that link Ramadas, I haven't seen an in-dept thread on the subject. I'll check it out
  • #17
  • May 4, 2016 5:48pm May 4, 2016 5:48pm
I trade through the metatrader 4, and I keep a separate window open with 9 charts on the m30 timeframe each,
Basically I zoom out the chart and add different pairs until I find the ones I'm comfortable with.
What I look for in particular is nice trending chanels (m30 is good for filtering out choppy pairs in my experience).
The truth is hidden from you
  • #18
  • May 4, 2016 10:48pm May 4, 2016 10:48pm
I think go with a pair or two is enough, and of course it must be major pairs.
I can focus on reading news and analysis about only that pairs, the prices might go fluctuate but I still can buy and sell pair in any situation.
  • #19
  • May 4, 2016 11:06pm May 4, 2016 11:06pm
Quoting MaxenshteinD
I trade through the metatrader 4, and I keep a separate window open with 9 charts on the m30 timeframe each, Basically I zoom out the chart and add different pairs until I find the ones I'm comfortable with. What I look for in particular is nice trending chanels (m30 is good for filtering out choppy pairs in my experience).
Which 9 pairs do you trade on M30? The M30 works for me too but so does M15 so I just trade M15. But, the 30 minute is a nice time frame too.
  • #20
  • May 5, 2016 3:50am May 5, 2016 3:50am
Quoting ohyeah
{quote} Which 9 pairs do you trade on M30? The M30 works for me too but so does M15 so I just trade M15. But, the 30 minute is a nice time frame too.
Usually a mix of majors and minors. Thing is though, as I said earlier I pick and arrange 9 pairs for later monitoring on M30. Once I see the price getting closer to a trend line/etc.
I have another ready mt4 terminal, where I put that specific pair in m15 m30 1h/4h , I'm a huge fan of multiple timeframe analysis. And for the entries them selves once everything looks good on m15-4h, I input the pair in to the third terminal where I could see it in 3 charts - m1 m5 m15.

Its indeed complicated but I like it, not that im into the whole "Holy Grail System", but I'm trying to master a very high probability entries and exits.
The truth is hidden from you
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