Benefits to Specializing in Trading a Single Currency?

[trawlerdude]

I appreciate your "hijacking" this thread. This is what our forum is all about. This is an issue that, rather or not we all know it, needs discussion.

I do not feel as though I qualify to give advice on FOREX trading at this point. I hope I did not put anything in my profile that suggests that I do.

I trade the 4 majors only. Rarely, (don't think ever) do I take a position on all four at one time. I enter a trade based on my entry criteria. I will take a position on any of the four when this criteria is met. I have found that when one makes a move, it effects the orderly process of the other and the pattern will be disturbed. Recently, I have been testing a strategy that trades all 4 majors at once.

If I get an ideal set-up on one, I take a position in all 4 based on them moving together. It is fairly successful. The thing that bothers me is that I really don't have a good feeling about some of the positions technically or fundamentally when I enter the trade. Recently by example the $/yen has been difficult.

For instance,

Good set-up for EUR/$ - Long
Then trade

GBP/$ - Long
$/Yen - Short
$/CHF - Short

Basic, but I just wondered how many others trade this way.

Thanks to everyone on this thread, GOOD INFO for us all.

LETS KEEP IT GOING.

[efex]

Hi Trawlerdude

How do you handle margin requirements when you open on positions on multiple pairs? Do you reduce deal size or increase leverage?

For small accounts like mine I never like sailing too close to a margin call, the banks always screw up at the worst times.

JT

[trawlerdude]

efex,

I never trade more than 5 lots based on the amount of my trading capital. I know this doesn't totally answer your question. It's just how I handle my account with SL set accordingly.

[doc]

To answer your original question, each currency has it's own characteristics. For a beginner, I would suggest focusing on one primary currency for trading. Thoroughly learn it's personality and you will be successful. After learning one currency over a reasonable period of time...months to years...then and only then learn another one.

I personally know many traders who learned the markets this way who now trade between 800-1200 lots of their own margin...not on a mini or a demo...per month very successfully.

It's like a really long courting/marriage process...at first you only see your date's party manners...then they reveal a little bit more of their secrets....eventually you are so intimate with them you either marry them or run screaming and yelling in the opposite direction. You know all their skeletons in their closet. Either way you thoroughly know what makes them tick and how to push their buttons to get the response you want. You also know when to give them a little space so they can calm down and get back to being more reasonable. You know when to hold on to them tightly in a loving caress, when to give them a quick hug/kiss in passing them in a hello or goodbye, or when to head for the pub for the night to stay away from all the nonsense.

For those nay sayers...a question for you. Would you rather marry or have a very close personal relationship with a complete stranger or have one with someone you know inside and out? You know speaking as a medical professional, if you just want one of those quickies with a complete stranger or an occassional/informal relationship with an aquaintance you can have a lot of fun for the night, but you run the risk of getting a life threatening disease. And for those nay sayers that promote casual relationships...unless you tell your frieinds the truth or at least give them some type of prophylaxis...you are promoting their death.

Trawler orgies may have been the thing to do during the 60's, but now they will certainly cause your death. You are right somewhat in thinking there is a close correlation between the majors since they all are crossed to the USD, but they all do not appreciate/depreciate at the same time. Yep maybe your CHF and/or EUR trades will both go good for you, but the GBP usually has a mind full of gin...no offense to our UK members (you are a part of my clan that left for North America in the 1600's...none the less your are my kin)...and the JPY is sneaking around like a ninga ( no offense again as they are very skillfull warriors) in the night waiting for the opportune moment to pounce on you. In other words, you may make money on the CHF and/or EUR, but the GBP you will be flat on and the JPY who knows?

Enough of the analogy already. Hope this helps. Do yourself a favor and stick to just one currency for a while. Which one...that's up to you...which one suits your trading style best? Which one are you naturally attracted to first? Who caught your eye for yet some unknown reason? Yep they all have a personality, but not all personalities get along.

Good Luck on Your Trades, Enjoy Riding Those Waves, and Remember We Are Our Brothers Keeper

Take Care.

[Marty]

In relation to following the majors, yes they are all in a way linked to the Dollar, purely from abritage or profit and loss.

Some of the more proactive prop traders or market makers who for arguement sake have a strong view on the Dollar, will sometimes trade through USDCHF as oppose to EURUSD (This obviously is from a fundamental view) because there is sometimes better opportunities in trading USDCHF, volatility, liquidity etc. and this will have an effect on EURUSD in the long run


So yes, I know its hard monitoring more than one currency pairing but you must try to lookat the bigger overall picture

[Paul Koszarny]

What to trade?
From the point of view of fractal modeling and fractal properties I would give the following rating to the majors:
1. EUR/USD
2. USD/JPY
3. GBP/USD
4. USD/CHF
Before the introduction of the euro the same table looked as follows:
1. USD/DEM
2. GBP/USD
3. USD/CHF
4. USD/JPY.
As you can see there has been a dramatic shift of the JPY, whereas CHF still remains low in the table.

For more colour I would look for a few adjectives and the first pair EUR/USD seems heavyweight, treachery yet unbelievably precise.
It gains colour for I think it used to be different (during the plummet from 1.1800 to 8225).

JPY has become more credible in forecasting. It's a happy ninja trading.

Any of these four would be good for the beginner who needs to concentrate on a chosen one pair. A broader picture is required for medium term trading. Intra-day I think one should develop a strategy pertaining to the very pair. Too much from the other markets may stop you from getting into the trade. I mean when you want to drive, you drive your car with discipline and freedom. Don't loosen your discipline on account of some fresh fundamentals which individually seldom change the sentiment.
Don't be carried by fundamental hours unless you have precise tactics short-term.

A professor in economics used to say: fundamentals are good bed-stories but seldom make good books. The next morning you may wish you had never told it.
Just try to understand the not-so-long mantra about the greenback over the board, on profi channels. The ambiguity of some type of TA findings is undeniable but at least TAs are not glued to one picture like dead mosquitos and are ready to apologize. Who of the mentors on TV ever apologizes in the evening for the morning fundamental outlook?

[trawlerdude]

Thanks for the advice everyone.

DOC - Your answer is exactly the direction I have taken. (Not the Trawler Orgies though, although this does sound interesting). Been married to one woman for 20 years, met her when she was 14. So I guess this is my style. Your thoughts help me to realize the benefits of mastering one currency pair. I actually first read this advice in a book and it made alot of sense. Thanks again.

1200 lots. Whew! Now there's an adrenaline rush. Take care.

[Mongoose]

You choose one currency you like and trade that, I will trade choose 10 currencies I like and trade them.

A robust system that works on all markets and time frames will only improve with more markets to trade. Having more systems is good too until that point that the marginal benefits do not increase relative to the inputs.