Saturday, December 26, 2009

Choosing a pair

A friend commented in a previous post : "Most of the time you trade EJ sometimes you trade EU. Do you watch both pair at the same time? When you trade EU how is that experience different from trading EJ? Isn't it that EU is very slow, unpredictable and spikes too much?"

I always have open charts of both pairs and examine the setups on both. I usually choose the pair with the bigger volatility. I have an ADX indicator (1 min) on a Market Analyzer in Ninja Trader which calculates the volatility of the two pairs for me. I choose the pair with the bigger ADX reading, if I can "feel" the corresponding setup. I also avoid trading when the pair has ADX<20. I "discovered" that, most of the times, when one of these two pairs ranges, the other one trends , and vice versa. This is due to the triangular correlation and fixing between euro, usd and yen.

When euro/yen stutters, euro/usd is FASTER, in most situations. No pair is unpredictable in the (very) short term, no one is predictable in the long term. Hope this helps.


Alessandro said...

wow I was looking for a betetr way to keep track of volatility and this is a nice way to do it!
Thanks for your suggestion!!!

Anonymous said...

can u share with me how to setup this indicator to see both volatility at the same time

The forexbird said...

please watch the videos concerning Marker analyzer on this page :

very easy to setup.

Alessandro said...

what are R4 and R2?
what those numbers represent?
R4 is range 4 and R2 is range 2?
I couldn't find a colum with that name, how do you find it?


The forexbird said...

all secrets revealed here, but don't say

R4 AND R2 are the readings of cci 50 in range 4 and 2 charts.

Anonymous said...

Thanks Forexbird for ur support :) i read ur blog almost everyday and it very helpfull for me thanks again

Pathak said...

It’s so vital that we do the correct selection as if we go with the wrong pair than we are likely to lose and I mostly suggest people to work on Eur/Usd only, it is a pair which is stable a lot more predictable. I am also getting charged a very low fees of just 0.2 pips spread with my broker OctaFX, it is one of the finest brokerage in whole Forex industry and also are multiple award winning company.