If You Can’t Beat Em, Leave Em
Now I’m not talking about banks because you definitely want to JOIN them (unless you are leaving Forex trading entirely).
What I am talking about is currency pairs. When you go deep into Forex trading, you might hear some traders say, “I’m a USD specialist” or “JPY specialist,” which implies you’ve studied the levels and price action of those particular pairs.
I prefer to trade systems, where your strategy will give signals, and you enter the market without over-analyzing as many other traders do.
During your back-testing, you might find specific pairs give you better results with your system than others do. Does that mean you’re a specialist in those pairs? I don’t think so.
Choose em right
When you first decide what pairs you’re going to trade, you might not have a specific reason for trading those currency pairs, but that doesn’t mean you should continue to be indiscriminate in your trading.
After you’ve participated in the market for some time, anywhere from a month to 3 months, look at your trading history and find out which pairs are losing you money and making you money.
Your decision after that should be a no-brainer. Stick with the winners and cut the losers… sound familiar? That’s the trading game. No need for a Ph.D., Just do some research, find out the numbers and follow them because numbers rarely lie.
Once you’ve chosen to trade those pairs that make you money, regularly check the pulse of your pairs from time to time and make sure they’re still performing for you by comparing them with other pairs again.
Your decision should include several factors, such as:
- Do you get stopped out a lot on a specific currency pair?
- Do your trades work out smoothly on other pairs? If so, why? Is it because your strategy works better in a trending environment or a ranging environment?
- Do big banks frequently trade your chosen pairs? That’s a big one, and it’s mostly the major currency pairs.
For example, if you find yourself trading a pair that is giving you mediocre results and many stop hunts also occur, maybe it’s not worth the risk to continue trading that pair.
In another example, say you get stopped out a lot. First, you want to make sure your stop is in the right place. If your SL is in the right place and you get stopped out a lot, maybe the VOLATILITY of that pair doesn’t work well with your strategy, and that would mean you might have to trade major pairs that are more liquid (Most of the time).
Just make a side note that LIQUIDITY = LESS VOLATILITY and VOLATILITY = LESS LIQUIDITY.
In the last example, I want you to think of TIME. Yes! Does the pair move at the right time for you? If you’re living in a country that’s not almost vertically in-line with London, then you probably have to trade at weird hours.
So if you find yourself trading a pair that gives you mediocre results and still forces you to get up in the early AMs to find opportunities, you’re probably better off without it.
Find pairs that generally move around the time when you’re awake. Missing opportunities because you were sleeping is normal and happens to all of us.
The answer is NOT to get less sleep. Just find a consistent time that you can trade consistently and find pairs that usually around that time. Disrupting your sleep to find trades will usually lead to physical exhaustion.
It’s something a lot of traders have tried, including myself. Whether you sleep 8 hours, 6 hours, or even 4 hours, get that rest in so you’re sharp and able to handle your emotions when you’re trading.
Specialist or Nah?
I trade specific pairs because I believe, after researching, that they make me the most the money. Do I think I’m a specialist? No. I may become a specialist. But since I trade a system, there’s not much I’m analyzing about any specific pairs.
I just plot significant price levels (Psychological levels) to mark out where we’re at and perhaps where we’re going, but that’s about it.
I do think there’s a way being a “specialist” could benefit you. If you choose to trade a particular pair and are determined to learn how to deal with that specific pair, you can then call yourself a specialist.
Some traders plot significant price levels but then go on to study the different zones (Places where price reacted in a big way and where you can expect the market to respond in a big way AGAIN) as well as a specific currency’s price action at and around those zones.
You can see which comes first when you trade a system. When implementing a system, the system usually comes before deciding what pairs to trade specifically. But attempting to become a specialist with a specific Forex pair forces you to mold your strategy around that/those pairs.
Don’t bet the farm.
Don’t lose your shirt.
Cut the L.
Keep the W.