Forex Pairs: The One-Trick Pony
By: Charley Warady
We have been concentrating on one of the Forex pairs, the EUR/USD along with the majority of Forex traders. But, as we have seen, it's in a very tight trading range and is hovering around its support/resistance line right now.
The Forex trader who only trades this market has increased quantities, pyramided, or any other number of things to make this Forex market turn profits. It hasn't been easy. Perhaps it's time to spread out a little. Trade other Forex pairs.
Trading Other Forex Pairs
You don't want to spread yourself out too thin when trading other Forex pairs. Besides being hard to keep track of, the more you spread out the more you're exposing yourself to added risk. If you're considering doing this, there are some things to keep in mind and the most important being – liquidity. You absolutely don't want to enter a market you're going to have a hard time getting out of. Leave those weird Forex pairs to Forex traders who have a sound and valid reason for being there. It's like a bad neighborhood. You don't want to get stuck in there alone.
Right now there seems to be a lot of interest in the USD/JPY pair. It has just broken through a resistance line and is holding that line as its new support. Although the trading ranges aren't much wider than the EUR/USD, it does show a different perspective and can very well add to your income. You don't have to abandon the EUR/USD pair to go over to the USD/JPY pair. Test the waters first and see how you like it. Try trading two Forex pairs at once. Multi-tasking for some means chewing gum and walking at the same time. If you are a step up from that, perhaps it will be the right thing for you.
Trading Times Of The Forex Market
Generally speaking, any pair which includes the USD will have proper liquidity. Not only because it involves the dollar (which everyone loves), but also because of the trading times of the market itself. The majority of the world is trading during the business day of the United States. If you're trading some obscure Forex pair in the Asian market, but you're trying to trade during American hours, you are going to have a tough time finding the other side to complete the trade. Another nice thing about trading only Forex pairs during the same hours is that you can increase your activity without decreasing your sleep. Trading Forex is best done in a large group, and you want to find as large a group as possible to play along.
There's no need to be a one-trick pony while trading Forex. Especially as a novice, you should try at certain times, or even simultaneously, various Forex pairs trading. You'll soon get to know your level of proficiency and comfort. Most of all, you will find a way to maximize your profits. The news in Forex will tell you where the attention is veering towards and in most cases, it can't hurt to investigate where the smoke is coming from. It might lead you to a profitable fire.