All Forex Currency Pairs In One Basket

By: Charley Warady

Don't put your eggs (Forex currency pairs) all in one basket. Everyone has heard that before and has had it applied to everything from career choices to...well...eggs. It's a good philosophy and certainly applicable to trading Forex currency pairs as much as it is to...well...eggs.

Many experienced Forex traders will tell the novice to start out by concentrating on one Forex trading pair until they get used to the feel of the market. But most agree that you need not stick to only that Forex pair for the duration of your trading career but try out various Forex currency pairs.

There are other Forex currency pairs and other markets and the well rounded Forex trader will be comfortable in any number of venues. This comes in handy when a particular Forex currency pair seems to be stalled in a tight trading range. There might be some fundamental news elsewhere that might effect another pair, at which time the ability to seamlessly switch over can be ultimately beneficial.

You need not necessarily completely leave the previous market to explore and jump into a new one. You might want to keep a long term trade active and, as long as your orders are in order, there is no reason not to spread out a bit. It doesn't take a multi-tasking guru to keep track of more than one Forex market. Particularly with the online charts that are available, the click of a button or two makes the system smooth.

However (and there is always a 'however,' isn't there?), there is a mindset that must be followed with the multi-market trading strategy. It is too easy, especially for the novice Forex trader, to think that because he is in more than one Forex currency pairs, it increases the odds of making a profit in at least one of those markets.

This is similar to a blackjack way of thinking. The guy that sits at a blackjack table playing six hands at once does not have better odds of winning than the guy that is only playing one hand. Just as he will have odds of making money; he will also have odds of losing money – times how many hands he is playing.

The same holds true for trading multiple markets in Forex. Each individual pair the Forex trader trades should be thought of as an entity in and of itself and not as a group of Forex currency pairs. They should be treated separately, and the profit and/or loss from each trade has nothing to do with the other.

Because what sometimes happens, is that the trader will spread himself so thin he's no longer able to keep track of the individual market in which he's involved. Then it becomes gambling; and that's not what you want from Forex trading. And don't even think about getting into different time zoned markets. You'll be dizzy from too much trading and lack of sleep. Your odds will certainly not increase. Expect the opposite.

Although it might not be wise to keep all of one's eggs in a singular basket, you have to be careful of handling too many baskets. They truly become hard to carry. Same is true for Forex currency pairs.

DailyForex.com Team
The DailyForex.com team is comprised of analysts and researchers from around the world who watch the market throughout the day to provide you with unique perspectives and helpful analysis that can help improve your Forex trading.