Which Forex Pairs to Trade?

Filed under: Learn Forex Trading |

 

To specialize or not to specialize, that is the question. Many professional forex traders choose to specialize in one pair (usually a major pair such as the USD/JPY) so that they can get to know the ‘personality’ of the trade inside out. However, if you choose to do this, this will leave you with a limited number of trades and you may be forced to trade the lower timeframe charts, which provide less reliable price action signals and much higher spreads – relatively speaking.

 

Personally, there are eleven forex currency pairs that I have chosen to trade, and these are the following:

 

USD/CHF

GBP/USD

USD/JPY

AUD/USD

EUR/USD

GOLD

SILVER

NZD/USD

AUD/JPY

EUR/JPY

GBP/JPY

 

This list includes all of the major pairs, bar the USD/CAD pair, which I find to provide less reliable signals. You might also notice that there are several minor crosses with the Japanese yen on this list. Although these are highly liquid pairs that provide good signals, you have to be careful not to double up on trades. For example, if you have trades open on the AUD/JPY, EUR/JPY, GBP/JPY, and the USD/JPY; you might find that a weakening or strengthening of the Japanese yen due to a news release may take you out of all of your trades simultaneously. If you were risking 2% of your bank of each of these trades, then you could lose 8% of your bank in the blink of an eye – which is far too much risk to be taking on. Therefore, you would be wise to only have one trade open on the JPY at any one time; otherwise, you are in effect magnifying your risk.

 

I do not trade every possible forex currency pair because in many cases, the spreads are simply too wide, and the signals are not reliable enough. Once you choose a selection of pairs that you are comfortable with, you can then add them to your trading platform and monitor them daily for any trade opportunities.

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