Which two FX pairs to choose?

[scotty_dog]

Looking to expand my trading horizons, ideally within European hours.

Via some back of the envelope logic and a Google on FX correlations, I'm thinking of starting with Cable and Swiss. What two FX futures would you recommend I have a look at?

Any comments, warnings, considerations appreciated.

Cheers,
scotty_dog

 

[Jack o'Clubs]

Depends on your time scale, but if you're trading futures on short term charts then liquidity will be important: the Euro has the greatest volume of the CME traded ccy futures, just from a practical consideration. FWIW, I trade Euro, Yen and occasionally cable through CME futures.

 

[scotty_dog]

Depends on your time scale, but if you're trading futures on short term charts then liquidity will be important: the Euro has the greatest volume of the CME traded ccy futures, just from a practical consideration. FWIW, I trade Euro, Yen and occasionally cable through CME futures.

Jo'C, thanks for the reply.

Am I right in thinking that FX futures liquidity is as follows, from greatest to smallest?

1 Euro
2 Yen
3 Swiss
4 Cable
5 Canadian
6 Aussie

 

[Jack o'Clubs]

That's more or less the data that I have, although my list has Swiss in 5th, below cable and CAD.

Also bear in mind that the e-minis in Euro and Yen are much less liquid than the larger contracts so better to trade full size if you can.

 

[pssonice]

great question, every futs at high volume is ok

it doesnt matter what u r trading. volume has to be the key on your decision

 

[damo484]

the euro/yen has a killer trend at the moment and has just broken out of some small consolidation. have you had a look at this?

 

[marste100]

I reommend you to trade the Usd/Jpy, and the Nzd/Jpy. It has trends very easy to identify.

 

[Forex_kid]

Aussie/US . The Australian Dollar seems predictable ever since the rate increase this month & the US. Dollar is likely to head downwards due to talk of reducing interest rates i believe.

 

[Depth Trade]

Looking to expand my trading horizons, ideally within European hours.

Via some back of the envelope logic and a Google on FX correlations, I'm thinking of starting with Cable and Swiss. What two FX futures would you recommend I have a look at?

Any comments, warnings, considerations appreciated.

Cheers,
scotty_dog

Hello Scotty,
You should also take into account that not all the pairs that you see as correlated, will move the same amount pips. One pair may move an average of .5% per day and the second may average 1.0% a day. For this reason if your trading a specific strategy that depends on both pairs being able to make up for previous losses, both pairs need to able to move as much as the other, or else your strategy will play out 'lop-sided'.

DT

 

[jiggly]

Looking to expand my trading horizons, ideally within European hours.

Via some back of the envelope logic and a Google on FX correlations, I'm thinking of starting with Cable and Swiss. What two FX futures would you recommend I have a look at?

Any comments, warnings, considerations appreciated.

Cheers,
scotty_dog

When pairs are highly correlated such as the cable and swissy, this means that they are practically moving together. taking trades on highly correlated pairs is like doubling up on either alone. any pairs correlated less than 60% of the time are a better bet in my opinion. expand your horizons by trading pairs in different timezones......and have your money truely work 24/7.


hope this helps

 

[jiggly]

Hello Scotty,
You should also take into account that not all the pairs that you see as correlated, will move the same amount pips. One pair may move an average of .5% per day and the second may average 1.0% a day. For this reason if your trading a specific strategy that depends on both pairs being able to make up for previous losses, both pairs need to able to move as much as the other, or else your strategy will play out 'lop-sided'.

DT

This is true but i believe you can compensate with risk management, we know that pairs act like this and can trade from these facts even with single pair strategies.

 

[HornedGod]

Is there a particular reason why you're looking for two FX pairs?

I would recommend just starting with one, the euro, primarily due its liquidity. Once you're comfortable and knowledgeable about one, it makes it much easier to branch out into other pairs.

Second choice would be cable. Third, the yen.