Monogamy or polygamy...

[Yuppie]

... when trading currencies.

I asked a few questions in TD's Potential Setups thread on this subject... they were unfortunately swallowed up in the "noise"... but, that is fair enough, as it is a thread about potential setups.


Anyway, I'll quote what I asked in that thread below (not that I'm totally lazy, but what I asked in the post is exactly what I'm trying to find out - no less, no more):

Magnus,
You should trade what YOU want to trade - it doesnt matter what - altho the cheapest things make most sense (ie.tightest spread) coz it keeps your costs down. eurjpy is a pretty major pair so spread cost should be ok.
you dont have to trade eurusd........ i heard from someone, cant remember who, but he traded just rbs shares........ he did so since the beginning of time and never had the need to go elsewhere.

there is definitely somethnig to be said for trading 1 market alone. the "big boys" have eurusd traders........ usdyen traders........ and so on........ so given the fact that you are probably not a "big boy", how can you expect to "beat them" if you are covering 5........ 10....... 15 markets.......... they will hunt you down... literally.

altho, to contradict myself....... there are many successful people who trade multiple products profitably........ i think it's a case of each to their own........ but if you arent being successful with 20 products....... cut it to 10, if you cant make profit with 10, cut it to 5..... and so on..... it's all about staying in the game and finding what works for Magnus.

Hope that makes sense....

ps. and regarding trading multiple timeframes........ keep doing it, why? because you have taken trader_dante technique and are makign it your own..... something everyone on here should have found themselves diong.

and

before i can proceed ..pls read omni's post he is true in his way trading multiple markets.. if you not comfi with 10 cut it down to 5..

when i meant eur i meant to say eur/usd more preferable than eur/jpy .. now this depends how you manage you risks for eur/jpy you have to give a bit more space to your stops.. if you are comfi with eur/jpy then go forit

what i mean by not chassing other crosses where like eur/aud , eur/cad etc ##or

2> you first take directional views looking at 4h or daily charts and then see if 1 hour trend .. take the trade based on 15 min chart .. this is how i trade ..

3> if you like eur/jpy no problem atall good moves happen in that market and if you pick th right move you cud go home with handsome profit and viceversa.. but i personally think you should have a stronghold on 1 particular product

best of luck

The James16 thread on FF is a good example of people trading multiple pairs succesfully - even the weird and wonderful(?) crosses... then there is Jacko's thread on FF where he (and others) trade EUR/USD exclusively.

I think just now I will compromise a bit. I will continue following the dozen or so pairs with the strict criteria I have for them - it's not time-consuming as I only keep an eye out for setups at obvious S/R levels (among other obvious criteria) - but focus more on EUR/JPY with the time I have free (beats reading the Spanish thread :-0 ).

I have a decent amount of experience with EUR/JPY. I'll see how it goes.

Cheers for your responses and any other comments/thoughts most welcome...


Actually, while I'm in the posting mood and you guys are fantastically helpful... I'm ultimately looking to work for a prop. firm - go a similar route to the way TD got to where he is (I talked to Tom around September last year about how he got in) - building a P&L record.

Would the sticking-to-one-pair route benefit or hinder such an aim?

Perhaps it doesn't matter?

Maybe there is a host of things I'm missing entirely?


Magnus

 

[N Rothschild]

well every market has a knock on effect to another market, once you have the experience and understanding there is no reason not to take advantage of this!

 

[elitejets]

There are very successful guys on this forum who only trade one market and very succesful ones who trade multiple markets.
Im sure at Futex there are guys who specialise in one market and those who cover a number.
Only you and the number of screens you have can decide by trying and seeing what suits you.
Obviously the higher the time frame you trade the less opportunities you will have if you only trade one market but that does not mean you will be less profitable.
Most successful traders seem to have tried a lot of methods and instruments before they found their style.
Good luck ...

 

[Pippy5000]

I only trade Forex because I've always figured it would be better to be an "expert" in one area rather than being medicore in several..

 

[N Rothschild]

i used to be the same with the dow pippy, but im having better sucsess including forex trading more fundementaly from what is happening in the dow, as we have been doing in your thread!

 

[arabianights]

I Like Breasts

 

[Pippy5000]

yep.. big ones ..

 

[Pippy5000]

In other non-breast news.. I watch the S&P 500 religiously as it is far more important to Forex than the Dow or Nasdaq.. It's very important to know the important s/r levels. Bank stocks are everything to Forex. Watch the tickers all day and news may tug and pull on the price action, but say something about banks doing poorly and watch everything but the USD and JPY tank hard and fast.. Conversely, breathe the slightest word of bank success and the knee-jerk reaction higher in risk currencies will leave you breathless.

 

[N Rothschild]

im just more in tune with the dow! mainly coz when starting out spread better i use min size is 10 quid a point on s&p as apposed to 1 on the dow

 

[Pippy5000]

interesting...

Dude.. check out the ultra weak chart the Nikkei has ..

http://www.nni.nikkei.co.jp/CF/FR/MKJ/nikkei225.cfm?data_name=Nikkei 225

I wish I could find a more decent real time nikky chart..

 

[Yuppie]

well every market has a knock on effect to another market, once you have the experience and understanding there is no reason not to take advantage of this!

If I were to quantify how I trade, so far, it would be typical S/R/Price-bar-formations/etc. This seems to lend itself well to pretty much any market.

However, from omni and supremegizmo, who I quoted in my first post. There seemed to be a tendency to favour trading only one market - from a working-in-a-prop-shop perspective (which is my aim here)... Pippy5000 said...

I only trade Forex because I've always figured it would be better to be an "expert" in one area rather than being medicore in several..

Now, I was actually meaning specifically one pair as opposed to trading forex only (this is what I am doing now). I am getting awkward, sporadic consistency. After omni said, "if you arent being successful with 20 products....... cut it to 10, if you cant make profit with 10, cut it to 5..... and so on...." it really got me thinking.

There are very successful guys on this forum who only trade one market and very succesful ones who trade multiple markets.
Im sure at Futex there are guys who specialise in one market and those who cover a number.
Only you and the number of screens you have can decide by trying and seeing what suits you.

I agree, FF is a good example of this. Some people stick to one pair and others trade anything that shows a setup.

From what I have found so far regarding multiple screens is that they are good up to a point, but I end up spreading myself too thin - quantity not quality of analysis/trades/etc.


I can see that if you could "master" trading one pair how that could help you trading other things. But, does each pair really have a distinct personality/nuinces/etc, that can make someone be able to get comfortable/confident with it? - Jacko's thread on FF for instance, I'm pretty sure he could trade any other pair than EUR/USD, but he sticks to that one.

Also, it's possibly relevant to state that I am doing this full-time just now. All day/evening every day/evening (but forex is only open 5 days a week I hear you cry - well, I go over trades, study charts etc ata the weekend). Perhaps I am saturating myself - thing is, I keep reading about/from [successful] traders who talk about how they struggled initially and spent so much time when they "didn't have to". But they did spend that time! And they are successful!! So maybe they did need to do that...


Thank you for your replies,

Magnus

 

[elitejets]

Also, it's possibly relevant to state that I am doing this full-time just now. All day/evening every day/evening (but forex is only open 5 days a week I hear you cry - well, I go over trades, study charts etc ata the weekend). Perhaps I am saturating myself - thing is, I keep reading about/from [successful] traders who talk about how they struggled initially and spent so much time when they "didn't have to". But they did spend that time! And they are successful!! So maybe they did need to do that...

Magnus
I don't buy the thing about not having to struggle initially. I think it is part of the process you have to go through to be successful and acquire the discipline required. I'm on the saturation route myself ...
Nicola

 

[N Rothschild]

here is a nikkei daily, also if you have cme/cbot access there is a futures contract for nikkei its NKEM9

 

[Yuppie]

Magnus
I don't buy the thing about not having to struggle initially. I think it is part of the process you have to go through to be successful and acquire the discipline required. I'm on the saturation route myself ...
Nicola

I concur Nicola.

I don't recall reading (m)any threads/sites/books where the author talked about how easy/quick/etc. his/her route to profitability was.

But... But... But... there are definitely routes that can make the journey less arduous (and occasionally more!).


My main query is with trying to get into a prop. firm... not having too much success with this thread so far... maybe rename it to the Nikkei thread.


Magnus

 

[Yuppie]

GammaJamma...

Thank you for your reply GammaJamma. Most appreciated. Read through it a good number of times - very thorough and informative. Has cleared up a lot for me.

Actually, it's pretty much convinced me that there is not a huge amount of merit, for me at least, with sticking to one pair only.

I think I will however keep the number of pairs I look at to a minimum just now. Perhaps half a dozen or so. I have plenty of screens, so that's not a problem.

Like you say, the correlation between the currencies is quite involved. Something I'm still trying to get my head around. You gave an excellent example of trading G/J while watching U/J and G/U... yet having then to watch the E/G flow... it's not too straight-forward.

This has cleared things up for me for just now. I will think over it some more though. Thank you again GJ.


Magnus

 

[foredog]

I had a debate (well - that's being a bit charitable) on this thread a while back where some numpty swore blind to me that eurjpy was completely and utterly unrelated to eur/usd and usd/jpy. Absolutely wouldn't be told. Funny - didn't last long

So in "numpty's" mind Barclays won't go down if there's bad news from RBS........hmmmm

some people are stoopid.

In my opinion it's worth covering at least a couple of markets becasue if one's dead the other may not be and if you're only watching the dead one you may end up making a "boredom bargain"

 

[MrGecko]

Perhaps a little late, but I reckon anyone starting out should keep eyes on EUR, USD, GBP and JPY. Covering all the bases takes an eye on 6 pairs.

Also, as you start to include other currencies, you expose yourself to pressures you can't always account for (or even be aware of if you start getting out to less familiar territory) - by trading CAD for example you should keep an eye on Oil. Of course this is true of the 6 pairs I mention, but in this case there is nowhere for the price action to hide. You should be able to tell whether your EUR/USD trade is being driven by EUR strength or USD weakness, for example (also a good idea to keep an eye on some other correlated markets as well IMO - sp500, Gold/Crude etc...)

One has to take the trading strategy and available information into consideration as well. A trader that takes a purely technical approach to trading (i.e. most of the traders here), and only ever on a relative value basis, will quickly find themselves flummoxed if they start doing the "round robin" analysis - like taking a view on GBP/JPY, but also looking at USD/JPY, GBP/USD then EUR/GBP... EUR/USD... the risk is that it all turns into a vicious cycle. It is all good and well if you can see the orderbooks in the spot/forward/swap/option markets... but if all you have are Alapri charts then the best approach (IMO) is to KISS

(the exception that proves the rule is that it can work with the crossess - i.e. say you have a GBP/JPY trade, you can eek out a few more points by legging out and in of the GBP/USD and USD/JPY elements as and when, always leaving your "base" position the GBP/JPY one).

 

[Crap Buddist]

Master What Is It I am Eating?

Well my personal view is focus (be aware) on 1 market day in day out 24/6.

Taking your observation away from one object market in focus, [may] puts you at greater risk of under performance through neglect and loss of both attentive & passive observation of that market.

Now I base this on point that a trader uses a (understands his/her own) mindset approach which is founded on his belief that Markets Are Not Random. Further it may take a trader a significant amount of time to reach that point of realisation.

In order for any one to walk a path towards any destination with true understanding of his relationship with his environment one must first know the reason for his own journey.

ohmmmmmm ohmmmmm ohmmmmmm

Ha Ha Ha you fool! To know others you must first know yourself and you don't even know that you know not who you are !

HA HA HA To know that your eating Rice you must first know that it's Rice, otherwise you'll be eating my C*CK ! HA HA HA !!!!

er, I better stop now....... Thank you.

 

[TheHoneyMonster]

It really depends what graph you trade from. If short term like 15min, i say stick to the one. Trying to divide your attention between multiple pairs will lead you to miss the minor details in price action that will make all the difference in p/l.
If you trade dailies, sure trade multiple pairs.

The old saying rings true here - jack of all trades = master of nothing.

 

[Crap Buddist]

One Observing One = One

Aah, with the intra day violence, the trader who still studies the one market can take advantage of the intraday swings and trade against & with his inter day position in the market providing that position is the markets position.

I do think in my view, a trader should be able to see opportunity and be able to cope/exploit his chosen market ,even though it may be ranging for a few days. And someone who chooses to specialize on one market will know even more detail and become even more expert by following 1 market permanently.

But this is also based on the individual wanting to perform with the market, if they get bored or fidgety or cannot sit and observe in "lay up" for a day or 2 or week, then perhaps their need to trade is greater than their need know or to form a relationship with their environments, which from knowing or having awareness of , one is able to begin to trade, constantly driven & working towards excellence of their individual performance , whereby the trader himself ceases to exist or matter .

The catalyst (or PUPA stage of the trader) that begins the sequence of inevitable change which ultimately transforms the individual trader to the point where he is the part of the market that thinks, comes from one observing one & becoming one. I respectfully submit

And that is enough of this ...... as I am watchin some Asian hotti caressing & cook her dumplings on the TV cooky channel .