In this episode of the Truth about FX, Walter talks about trading pairs, following trend ratios and observing the market, relying on things that you are familiar with, and focusing on what you really want as a trader and using that setup.
http://media.blubrry.com/truth_about_fx/content.blubrry.com/truth_about_fx/TAFX_-_EP4_Which_Currency_Pair_To_Trade.mp3
Download (Duration: 03:25 / 3.92 MB)
In This Episode:
00:25 – What’s the best pair to trade?
01:13 – Trading against the crowd.
01:56 – What are you familiar with?
02:30 – Focus on what you want to do.
02:56 – Trading set up.
Tweetables:
Watch out for trading opportunities, you never know when they will appear [Click To Tweet].
What do you really want to do as a trader? [Click To Tweet].
Start with what you know [Click To Tweet].
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Hey Walter. Today’s question is: What is the best pair to trade?
Walter: Wow! Hugh what a great question.
Hugh: I know it’s a little loaded.
Walter: Yeah, it’s a little loaded. Here’s the thing: what I would say is it’s going to depend.
There’s a couple of ways to look at this. One is, you can actually look at where are most of the traders on one side of the market rather than the other. Let me explain this, there’s a couple of ways to approach this.
One is, are all the traders – like 85% plus of the traders – going long a certain pair? Recently, two days ago, 85% of the market was buying a silver against the USD. More than 85%; 85.6% I’ll show you how to track this on the show notes. For this, you can click that link and see for yourself.
But what that means is, most of the retail traders were buying silver and I wanted to be short, okay? So that flags for me at the time to be short.
The reason why is because most retail traders aren’t making money. So if you get a huge majority going one direction, you want to get ready to go the other direction and be with the small group of traders making money.
That’s one way to answer that question. Just scan the market and see. Follow what the trade ratios are. Are most people short or are most people long?
Occasionally, this gets out of the whack, where you see 85 plus percent on one side or the other.
The other thing to say about this is: what are you familiar with?
I live in Australia so I know that just being around. I try not to watch the news and things like that. But you see, you know what’s going on in your home country. So if you live in Germany, you might want to trade the EUR right? The EUR/JPY, the EUR/USD something like that. If you live in Australia like I do, maybe it’s the AUD/USD. Maybe that’s your pair because you’re familiar with it.
Now,