If someone should concentrate on one currency pair in their forex trading is a fundamental question that needs to be addressed and matched to your trading style before you are going to be successful.
If someone should concentrate on one currency pair in their forex trading is a fundamental question that needs to be addressed and matched to your trading style before you are going to be successful. My gut feeling is that the shorter the timeframe you use on your charts to make trade decisions, the lower the number of pairs you should trade. Let’s get into the details:
You can be successful trading one pair
Many Traders are successful trading just one pair. The advantages of trading one pair include getting to know how one currency pair moves better, less to concentrate on when trading, which in turn leads to less distraction. One great example of a trader who is successful trading only the GBP/JPY is NickB at the Forex 4 Noobs website. By only trading the GBP/JPY using his scalping strategy, he has averaged over 100 pips profit every week for a year. I really like his site and love to use his trading for newbies as a simplistic approach to becoming successful.
Many traders do not like to trade one pair because their trading style doesn’t get them into trades as frequently enough as they would like and they feel like they are missing out on the action. I call these people over traders and most of them will not be successful at all in the long run. I personally like to only trade one pair when I am trading with my 1 minute scalp system that I am develping right now. It moves to fast to look at too many charts at once.
You can be successful trading multiple pairs
My major trading style is one that only presents trades at most 5-12 times per week. Considering the low frequency at which this trades, I can successfully monitor all of the major pairs and many of the crosses at one time to look for the best entries and highest probabilities for what I think will be great trades. I don’t trade all of these pairs at once because I am impatient. I merely can do this, and I have test my success to make sure I am not over trading.
As many of you know I mostly use 1 hr charts for my overbought and oversold trades, and I also look at the 1 day charts to see if there is any price resistance in the area that I should be aware of before entering. This goes right along with my idea that the longer the time frame, the more pairs you can trade.
Advice for new traders trying to decide which pairs to trade
My personal trading experiences were with every currency pair. In the beginning I think new traders should learn as much as they can about every pair. As you build a trading style that is consistent, you will learn that there are certain pairs that just don’t play nice with your trading goals. I have only recently even strarted looking at scalping in my trading, and this is after years of trading much longer time frames. I am now concentrating on a couple of the majors with low spreads for short scalps, but really never more than one at a time to avoid hasty trades and confusion.
And I don’t think I even have to say that new traders should not be trying any of these strategies with real money. It’s much better to lose all of the money in a demo account a couple of times, than it is to try to tell your wife where all of that money went. Learn from listening to other traders, trade on demo, become humble, then start your journey. You’ll thank me later