Today’s Top Forex Pairs

This chart displaysthe relationship between the loonie and price of crude oil. This can be ended to following the too strong trends that some currency pairs form sometimes. Note how pairs with wider interest rate spreads typically trade in larger ranges. June 13, at 1: I agree, trend trading is easier said than done but with patience and discipline it is doable. Hi Chris, you are always right. The Majors There are only four major currency pairs in forex, which makes it a quite easy to follow the market.

We hear all the time that a trader should only trade one or two currencies. We have found that a trader can trade multiple pairs and be successful.

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I admit that there are some currency pairs that form stronger, longer and more stable trends compared to the other currency pairs, but the trends they form are mainly trade-able on the long time frames. It means when the price goes down and forms a low, it has to be higher than the previous low.

Sometimes the price behaves strangely, even on the longer time frames. Therefore, traders have always tried to create and use some tools or indicators to become able to distinguish and locate the trends easier. Moving Averages are the most famous indicators that have been used by traders to locate the trends for several decades. The other indicator which is also a moving average but with different settings, is 20SMA which is in fact the Bollinger Middle Band. And if they do, can they also help us trade the trends?

The question is how could we know that a trend was forming and we could enter the market on time to follow the trend? If you use the moving average indicators, then you have to wait for the price to take a special direction strongly first. Then, if it goes down to retest the moving averages and goes up, that is the right time to enter the market to follow the uptrend.

This technique works theoretically, but in reality you will lose in so many trades to find a trend finally, because when the price goes down to retest the moving averages, you never know that whether it will go up again to continue the uptrend it had started, or it will go sideways and keeps on crossing the moving averages.

If you check the above screenshot, you can locate several cases that the price has hit the moving averages, but has not moved up strongly after that. This happens a lot when the uptrend is not strong, or when the price wants to form a small downtrend, and then follows the uptrend. I am not going to talk about the trading systems to follow the trends here, because we have already talked about them a lot. What I am trying to say here is that even if there are some currency pairs that trend more than the others, it is not that easy to follow the trend they form, unless you already master a trading system like technical analysis or candlestick patterns.

You will admit what I say if you see the below screenshot. There is a downtrend at the left, and an uptrend at the right. What we have at the left is still called a downtrend, but it looks impossible to trade using the moving averages, or even technical analysis.

Some parts of the right side uptrend are trade-able but there are some choppy areas and sideways movements at the middle of uptrend. There were some good chances to follow the upward movements:. In general, mastering a trading system and using it to locate the too strong trade setups on the long time frames is the best way of follow the trends. Those who try to hit the bottom or top of the markets, usually lose a lot sometimes. Among these traders, are those who try to follow the most trending currency pairs on the shorter time frames.

Traders have to know that it is not possible to catch all the movements and strong trends, because we never know what trade setup ends to a strong trend. All we can do is that we take the strong trade setups, set a reasonable and proper stop loss and move it to breakeven at the right time.

If the trade setup we take ends to the formation of a trend, then good. In that case, will it be a setup? Hi Chris, you are always right. I have experienced how difficult and risky is to trade the trending currency. Especially if you have not Experience. I understand those who are already experts who want to take every possible opportunities for profitable trade. For me it is premature.

I would say an uptrend will have higher lows, and higher highs, Correct? And Chris you are right on, it is not easy to pick out the trends on lower time frames, total different picture. Great article as always.

It has to have higher lows to be an uptrend, but at the same time it can have lower highs. See the examples in the above article. Thanks for another great article. When it the right time to move a stop loss to breakeven? I know that we say to do it when we hit TPx5 or whatever, but I wonder if the setup is not a too strong score then moving up sooner is wiser? I have had trades with a target of TPx5 hit the TPx3 level and then reverse to hit the stop loss.

There is no exact answer to this question. There are a lot of signals that you can use to move the SL to breakeven. Many traders expect to enter at the start of a trend and exit at the very last candle. But I think if we are truly professional to take even two third of a trend that is a huge success for us. I hope we could grow our account to a reasonable balance soon with your help to savor the peace of mind of longer timefrmes.

Hi Chris I think one has to have nerve of steel to follow a long term trend, because at the first retracement or correction I will get out. Hi Nicolaas, I have the same problem: May be the success rate would be a little bit lower,but trading stress free is really worth this. Fact is that only when we feel emotional pain and dissapointment from losing trades we start to pay attention to strong trade setups how strong they are and it is worth to enter on trade.

Many off us enter on market becaouse they think that this will work out insteead to listen the Market what is got to say. We are lucky becaouse we have each other,we have chance to learn together, to educate ourselfs and support each other and having you Chris as our mentor and LuckScout team is most precious thing we ever need to become consistantly profitable trader.

One of the reasons is of course that there is very little difference between the growth rates of Switzerland and the European Union. Both regions run current-account surpluses and adhere to fiscally conservative policies.

One strategy for range traders is to determine the parameters of the range for the pair, divide these parameters by a median line and simply buy below the median and sell above it. The parameters of the range is determined by the high and low between which the prices fluctuate over a give period. See Figure 5 below. Remember range traders are agnostic about direction for more on this, see Trading Trend or Range? They simply want to sell relatively overbought conditions and buy relatively oversold conditions.

Cross currencies are so attractive for the range-bound strategy because they represent currency pairs from culturally and economically similar countries; imbalances between these currencies therefore often return to equilibrium. It is hard to fathom, for instance, that Switzerland would go into a depression while the rest of Europe merrily expands. The same sort of tendency toward equilibrium , however, cannot be said for stocks of similar nature. It is quite easy to imagine how, say, General Motors could file for bankruptcy even while Ford and Chrysler continue to do business.

Because currencies represent macroeconomic forces they are not as susceptible to risks that occur on the micro level - as individual company stocks are. Currencies are therefore much safer to range trade. Nevertheless, risk is present in all speculation , and traders should never range trade any pair without a stop loss. A reasonable strategy is to employ a stop at half the amplitude of the total range. In other words if this pair reached 1. Interest rates are the reason there's a difference.

The interest rate differential between two countries affects the trading range of their currency pairs. For the period represented in Figure 5, Switzerland has an interest rate of 75 basis points bps and Eurozone rates are bps, creating a differential of only bps. However, for the period represented in Figure 6, however, the interest rates in the U. K are at bps while in Japan - which is gripped by deflation - rates are 0 bps, making a whopping bps differential between the two countries.

The rule of thumb in forex is the larger the interest rate differential, the more volatile the pair. To further demonstrate the relationship between trading ranges and interest rates, the following is a table of various crosses, their interest rate differentials and the maximum pip movement from high to low over the period from May to May While the relationship is not perfect, it is certainly substantial.

Note how pairs with wider interest rate spreads typically trade in larger ranges. If you use this method, then it is certainly possible that a pair which was interesting in the past becomes less interesting in the future; and vice versa.

For instance, if you are a trend trader and the EURUSD breaks out of its consolidation to start a downtrend, then this price action and the pair would become interesting.

This is a considerable disadvantage as more risk is taken without any diversification benefit. Selecting the best moving pairs depends on avoiding over-reliance one currency.

When you only trade one currency against all other currencies, you have all of your eggs in one basket. This means that if the Euro drops and you are long on a numerous Euro related crosses, then chances are high that you are losing many of those Euro longs.

Hence it is usually better to spread the risk and choose a variety of currencies. You can opt to include some Euro pairs but also choose some non-Euro pairs to make your overall approach more balanced. Selecting the best moving pairs depends on your strategy mix. Of course, if you are trading with a single strategy then this factor is irrelevant. But for those that trade multiple strategies, it is smart to analyze whether your strategies are not over-reliant on the same or correlated currency pairs.

Even though the strategies are different, there could be increased risk associated with trading the same pairs from a portfolio perspective. Selecting the best moving pairs depends on choosing tools and indicators.

Is it really that simple to tell the difference in a trending market?

How to Identify a Currency Pair that is in a Trend. As can be seen on this chart, this pair demonstrates the most compelling signs that the pair is trending to the upside: it is building. Dec 23,  · how to find which pairs are trending {i'm a day trader} Trading Discussion. Gain a trading edge by learning how macroeconomic forces play out differently for various pairs in the forex market. Identifying Trending And Range-Bound Currencies trend trading in forex.