How many pairs on your list?

Stock traders screen (or at least can) 100 odd stocks per exchange yet the majority of currency traders only trade 1 maybe 2 crosses, how come?

Perhaps because there is enough opportunity in a few currency pairs.

Most of my friends trade futures. Frequently, like me, they only trade one contract at a time (I trade HSI).

Even those trading multiple contracts typically seem satisfied with 2 or 3 at a time. If they add others, its when they trade across different day boundaries so perhaps they trade N225 during the day and switch to Eurfx, ESTX50 or Dax when trading starts in Europe.

wasp said:

Stock traders screen (or at least can) 100 odd stocks per exchange yet the majority of currency traders only trade 1 maybe 2 crosses, how come?

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hi wasp,

the first thing I can think of is the time frame. I guess there is a rather high correlation between the time frame the trader uses vs the lower the number of pairs a trader considers, due to simple attention needed to manage/monitor trade setups.

I personally trade or watch for setups on EURUSD, EURCHF, EURJPY, USDJPY, USDCHF, GBPUSD. With a strong preference for EURJPY and Cable. That is more than enough for me for the time being.

regarding the diversification issue, I am starting to consider Indices and Oil, but only at the consideration level as of yet, with no move expected on my end for the next 6 months on that front.

good day
j

I used to trade only euro/usd, then switched to cable.

It was only after the new comp came about that I now watch and trade the main four.

It has been an eye opener and made me realise diversification a bit more. Before that I used to look at the euro and the swissy opposite each other, but didn't like that too much at the time as I used to think along the lines like a lot of people do that swiss goes first then euro. Jesuzzzzzzzzzzzz, How much has that cost me? ThenI watched/traded only cable.
It was good but I am missing so much out by not looking at the 4 main pairs

Not doing too well on comp at the moment as in real life, as the first few days of this month have been tied up with court battles and blood sucking legal people.

Oh for a uzi!

Just five main dollar pairs, although that's traded as futures as part of a larger group of about 30 contracts. The main thing I find I need to watch for is that I'm not just doubling up on a dollar move, rather than the other side, otherwise I'm just taking a disproportionate bet on the dollar. I could try and trade some of the non-dollar crosses directly but I find it's generally better liquidity and spread if I synthesize them through their dollar pairs.

Stock traders screen (or at least can) 100 odd stocks per exchange yet the majority of currency traders only trade 1 maybe 2 crosses, how come?

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I think the answer is two-fold;

1. All the majors are against/with the USD, so if you trade all the majors, you are not really diversifying at all most of the time, the USD tends to be the dominant currency in the partnership, so if one goes down, then the other goes up and vise-versa, the correlation between the EURUSD and the USDCHF is somewhere in the 90% range for example (in the opposite direction of course), so chances are you are going to be either right or wrong twice each time. The USDCAD has a life of it's own at the moment, and at times so does the USDJPY although not so much, but in essence while there are 5 major pairs, I could only say trading the USDCAD and one of the other majors is really diversifying.

2. The crosses, apart from perhaps the EURJPY have shocking spreads at most brokers, so tend to be avoided by a lot of traders, the GBPJPY for example has some impressive volatility but a spread of anywhere from 5 pips (rare) up to 9 or 10 pips (more common), why trade those when you can trade the EUR on a 1 or 2 pips spread? The volatility and volume on crosses also tend to much lower than the majors and so can leave you stuck in a sleeping trade.

Just my thoughts anyway, happy trading!

Its all relative IMO. A larer spreadand a larger move with the equivilant position size will earn equal eur/usd or gbp/usd and a lot of the minors are a tad more exciting than cable of late.

http://www.saxobank.com/?id=1424&Lan=EN&Au=2

for example, last weeks NZD move was +700 pips yet the spread was 35. This month cable has moved +120 piips with an average 2 pips spread so nzd wins IMO.

There is some truth in that wasp for last week, however how is a trader to know that a cross is going to have a huge week like the NZD did, in terms of consistency in movement week after week, you can't go past the majors on yearly historical basis, hence why traders gravitate to them.

'tis true yes, but no risk, no reward hey!! :cheesy:

wasp said:

Stock traders screen (or at least can) 100 odd stocks per exchange yet the majority of currency traders only trade 1 maybe 2 crosses, how come?

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Well you know the answer to this already wasp! I trade primarily Cable, GBP vs CAD, CHF & JPY, USD/NOK, USD vs PLN, HUF, MXN and EUR/JPY

I look for pairs that suit my strategies

My ccy pairs are as follows

EUR/JPY
GBP/USD
EUR/NZD
GBP/CAD
USD/SGD
AUD/JPY
EUR/USD

This gives me a varied exposure to all majors but CHF, some minors & the exotics. I'm reluctant to add more (a the moment) as they just increase my exposure to either EUR or USD because of what's available. The reason I picked these is also because they exhibit strong (weekly) trends in their charts.

GammaJammer said:

And the answer is that most retail traders do not have the first clue what's actually driving the world's currency markets, and rely primarily on either pure technical factors or maybe basic fundamentals at a push. And when viewed like that most currency pairs appear to be similar. So they go for the ones with a seemingly tighter spread on whatever platform they're using (I say seemingly because they also usually don't know how to evaluate the tightness of cross spreads in terms of their component majors so can't see past a raw '10 pip' spread in some cross to see what that implies).

GJ

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And the value of a spread is related to the timeframe that the trader intends to trade it on....eg. scalping GBPCHF on a 1-minute chart with a 10-pip spread may prove difficult. But if you intend to trade it on eg. daily charts anyway, the 10-pip spread is a lot less relevant...

There's also this broker. Not sure who they're regulated by though........
http://www.northfinance.com/eng/cfd/specification-of-forex-contracts/

Gammer basically just described me

3 minute!

hehe

6E Globex For me...

i trade exclusively the euro and like jacinto said this is mainly because of the timeframes i look at. i look at the monthly, weekly, daily, hourly and about 80% of the time i spend looking at the charts is a 5 minute chart.
like options said since this competition i started looking at the other pairs and the good thing ive found about this is when you think theres a move in the dollar coming up you can look for the best setup on a paticular pair. so its been enlightening but theres a downside - where the hells my intuition gone? if you just trade one pair and youve done your homework you know where you stand and can get a feel for whats going on, whether this means getting out of a trade before its made any profit to then see it hit the stop you had 5 minutes later making the risk reward look daft or just outright breaking rules because of a strong feeling you have this is something that at the very least is diluted or weakened. keeping track of the numbers and ideas youve formed through the different timeframes along with a friendly subconscious is more valuable, at least to me than finding more or slightly better set ups.

I personally scan through all the pairs (and time frames) available searching for trending scenarios. If there's no trend in the majors, why not broadening up the options to crosses?