All 28 pairs can trend up and down for days, weeks or months. Similarly, all 28 pairs, including the forex major pairs, can become choppy and difficult to trade, or oscillate in wide, trade-able ranges. As a forex trader we are looking for trending pairs that we can enter a trade with, then ride the trend up and down for long cycles, but we can also do short term trades for intra-day or day trading profits using our tools and indicators.
The only thing that matters is the strength and quality of the trends and trading signals you use with our trading system. You should not have any bias towards any pair. Always trade the best opportunity that the market trends and signals present to you of the 28 pairs we have at our disposal every day. If the market is choppy or the signals are weak you can also choose not to trade. We trade 7 forex major pairs and a total of 28 currency pairs with the Forexearlywarning trading system.
Since our trading system accommodates so many pairs, it takes some traders a while to get used to trading this way. We will review the characteristics and traits of all 28 pairs along with a comparison of these characteristics. Charcteristics like volatility, spreads and when these pairs move, etc.
A forex major pair is a currency pair with the USD on the left or right side of the pair. We trade a total of 7 major pairs with the Forexearlywarning trading system. With the Forexearlywarning system we trade eight currencies. The other currencies are more reserve based currencies, which are held in large quantities by governments and banks. These eight currencies can be combined into 28 pairs. These 28 combinations include 7 major pairs and 21 exotic pairs. All 28 pairs can move in the main trading session.
These movements can carry forward to the main trading session and give sizable movements, but this only happens a few times per month. Be sure to check our complete article about trading in the Asian session and also about the limitations.
Also, the JPY pairs can move in the Asian session when they are in consistent up trends or downtrends on all pairs. If you check the economic calendar for the main trading session you can see how the European based pairs can move first followed by the USD and CAD pairs as the trading day progresses. Currency pair characteristics for causing price movement are pretty simple. Pairs move because one currency is strong or the other currency is weak, or both.
There is absolutely no other reason to trade a pair looking to profit from the movement. Most of the movement is in the main session with occasional movement in the Asian session, perhaps 3 times per month, this is the nature of the trading sessions. The volatility of the 28 pairs we trade varies quite a bit.
Comparing the volatility of one pair to another is easy by looking at the price quote, then subsequently moving a decimal point. If the bid price is 1. All of the forex major pairs and all 28 pairs we trade pairs can be volatile after related news drivers, even in the Asian session.
How currency pairs are quoted varies somewhat. This takes some getting used to. Just remember that if all three pairs moved up 10 pip each only the two digits on the right would change. The spread is an indicator the daily trading volume for that particular pair. If the spread is 0. This makes sense because the EUR and USD are the two most commonly traded currencies and the spread is generally the lowest on this pair.
So traders can conclude, as a general rule, that the lower the spread, the higher the liquidity. Look at the spreads on all 28 pairs we trade to get a feel for the liquidity. The spreads on the forex major pairs and all 28 pairs we trade are acceptable and are only somewhat high on one or two pairs.
A list of some typical spreads for most of the 28 pairs is in the image below. One of the currency pair characteristics that is variable is the pip value, or payout, it varies from pair to pair. The payout is the amount you get paid or lose for 1 pip of movement after you are in a live trade. The value of one pip of movement is always different between currency pairs because there are differences between the exchange rates of different currencies, and the currency your trading account is funded in.
In this case the payout for 1 pip of movement is 1. If your account is funded in another currency you would have to re-calculate the 1 pip payouts on any transaction.
Fortunately rather than having to use a calculator every time, all you have to do is place a trade and the math is worked out in your trading platform. So calculations are not needed, just do some demo trades to see how the values change on any pair and look to see how the profit and loss fluctuates. Swaps or rollover interest is the amount of interest paid into or debited from your account once per day based on the positions you are holding. Since retail forex trading is leveraged the interest rates must be accounted for.
It varies for all 28 pairs and is dependent on the interest rates in the two currencies involved. If the interest rate differential is high between the currencies the daily swaps can add up. Also, if the interest rate between the two currencies is similar the daily swaps will be small or negligible.
Your broker should be able to provide you with a list of the daily swaps for buys and sells of the forex major pairs and all 28 pairs we trade. The interest paid or debited into your account happens automatically and is programmed into the broker trading platform.
So interest rate differential between the two currencies in the pair is a unique characteristic of each currency pair.More...