How many currencies do you play with?

Discussion in 'Forex - Currencies Forums' started by WaveWage, Sep 7, 2015.

  1. WaveWage

    WaveWage Well-Known Member

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    Within FOREX, the currency choices are limited, obviously, to the number of currencies and of the exchanges available in the market: unlike stocks, the number of currencies is pretty fixed and not changing, meanwhile the values of each currency may change. However, the more you focus on some currencies, the bigger is the risk if there's a problem with one currency, or with one main country using that currency.


    So, that being said, I wonder that, with a reasonable amount for an investor, with how much currencies should we consider to play with? And obviously, we should keep in mind that diversity over currencies doesn't prevent any risk because there might be a big market problem, like little "shocks" or anything.
     
  2. JoshPosh

    JoshPosh Guest

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    It really depends on you trading style and you threshold for playing pairs that are notoriously volatile. The eur/yen has some serious volatility and if you are a short term scalping type of trader, then that pair would suit you fine. I use to spend hours on end playing that pair, and it is volatile. Just be careful, because it can whip saw against you quick and take you stop and come right back to the open price again.

    If I do long term trading I usually do a basket trade and play several pairs at the same time. It would be the US based pairs and I just follow the trend. It might go against you for a little while but the river will always correct itself eventually, and if you use proper margin management, you won't be in fear of stopping out.
     
  3. Rainman

    Rainman Senior Investor

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    It's always advisable to choose only two currency pairs. This gives you some sort of safeguard so that in case your "primary currency pair" doesn't make you any money you will recoup your losses with the second currency pair. Try trading too many pairs and you'll end up losing a lot of money.
     
  4. WaveWage

    WaveWage Well-Known Member

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    In fact, I feel that many currencies that are not as powerful as USD/CAD and EUR are really prone to volatility. Sure, I know it depends of the pair, but I feel the less the currency is used, the more volatile and less stable is the currency. I don't know if the countries with less wealth in their money tries to make this volatility or if it is a downside they can't really fight against. Just saying.
    Anyway, you are right. Some currencies pairs are known to be more volatile than others, so it should affect the choices. But if I read correctly what you said, you would go to many currencies only in the case of long term, but short term you would choose only few?


    And here got an opposing point of view! Why would you advise against having many currencies and why would we loose more money by buying over more currencies than one? A question of human concentration? Something else?
     
  5. Rainman

    Rainman Senior Investor

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    To make money in Forex you need to be more than familiar with all the currency pairs you trade. You need to know everything you can about the economies of the countries because the value of the currency hinges entirely on stability. All this information which must be processed in order to make the right calls at the right time can overwhelm someone which is why it's better to choose only one or two currency pairs.
     
  6. WaveWage

    WaveWage Well-Known Member

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    Interestingly, I would have said the reverse. Yes, a general understanding of the economy and some look at the news would help you to avoid falls, but outside if you plan to do long term investment based on FOREX (I'm not sure it is the right time to do long term investment in FOREX), I think when you do day trading, you already put reasonable sell stops and eventually buy stops. So if you are already reasonable, there's so much need in my opinion to overinvest in the knowledge. However, it may help you to save more dollars when it falls, and the more you know, the more dollar you may save when the direction is changing.
     
  7. Onionman

    Onionman Senior Investor

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    The only ones I really dabble with are the GBP against HKD or USD, and the HKD/USD against EUR. I'm not really a currency person but I tend to have a general feel about where the average trading level is for certain currency pairs. So I always keep them in mind and simply swap in and out of accounts to reflect the trade. It's not the most sophisticated approach and I certainly don't get the best bid-offer but it works well enough for me.
     
  8. radex78

    radex78 Senior Investor

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    Usually I am open on my chart multiple pair like as usdjpy, gbpusd, usdchf,erjpy, eurusd and sometime look for gold, but in my trades not all pair I will traded and only choose one or two pair because to manage the risk, often I am like on pair eurjpy because average movement also good and spread fee also in low spread which in my current broker Instaforex only with spread 3 pips.

    I think although trade on one pair also already will profitable if trader already able analyze the trend market with good accurate and have more winning trades than loss trades.
     
  9. Linda Smith

    Linda Smith Senior Investor

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    if you are looking for trade-in forex or any financial market then its highly advised to you that stop following what other professional traders do. You should have your own plan. At the very beginning never try to be a clone copy of a professional one. Try to be a good beginner in forex trading like focusing on trading styles, trading techniques.you have to spend your most of time finding out easier way to be a good forex trader. I am currently trading with the TP Global FX broker. They always help me to make a profit from this market and always help me to make decisions properly.
     
  10. Lindsey J. Crosby

    Lindsey J. Crosby Member

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    I don't prefer to trade a lot many currency pairs. For my trading I essentially trade EURUSD, EURJPY, NZDUSD and GBPUSD pairs. I fathom these FOUR pairs more as I have done an extensive research on them. To me it is a sharp idea to trade conceivably a couple of pairs. It urges us to welcome the attributes of that solitary match. For my trading I use Eurotrader platform. I like the broker's diagramming. It doesn't make any phony candles which is valuable for my analysis. It also provides ultra low spreads starting from 0.0 pip.
     

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