The choice of the currency pair is the same element of successful trading as risk management or trading strategy. The right choice guarantees you trade on the trend market and quick achievement of the financial goal. Do you believe in your right approach to the choice of trading pairs? How often do you expect the ending of the side move? How often does the market not reach your goals? Do you know these problems? If you ask yourself these questions then this problem exists for you. And you need a solution to improve the results of your trade. Check out our idea and method for defining the best trading pairs for trading on the Forex market. The methodology of Currency Indices allows you to select the best instruments for trading in the Forex market. Change your mind about choosing a trade pair in the forex market. By using our technique, you will get a great tool that will allow you to select the best instruments for trading on the market.
Strange that this issue is paid so little attention. Studying articles and books on forex market you will found a lot of information about entry into the market. About the points of exit from the market. About how to recognize trends. About the beginning and the end of the trend. And nothing about how to choose the right tool for trading. So, you are trade a pair of EURUSD. Why? This pair have hige level of liquidity. While EURUSD pair passes for a month 250 points GBPNZD pass 900 points? So why do atention to liquidity? To trade for you need a dynamics.
In 99% of cases the authors do not understand the essence of the issue. Therefore, they write about liquidity. For a private trader in the forex market, she absolutely does not play any role. The trader is interested in one thing – how many points will pass a trading pair.
To get an answer to this question will do a little analysis.
What is trading pair? For example – the EURUSD trade pair. This is the ratio of two currency indices – the Euro and the American dollar. So, the ratio of the indices that are in the trade pairs in the basket of currency pairs is important. This is an important point. It is important for us that these indices move in different directions. If the Euro is growing and the Dollar is declining – the quotes of the trading pair are increasing. And vice versa. If both index Euro and the Dollar is rising that trading pair have of side move.
So in order to understand how the trading pair behaves, it is necessary to analyze the currency indexes from which it is composed. By examining the behavior of currency indices, you can determine which trade pairs have the best potential for movement. That is, they are trendy and most interesting for trading in currency speculator.
Trade pair GBPUSD
Conclude: in order to choose a trading pair that will dynamically move you need to do an analysis of currency indices. Select those that you expect to be moving in different directions (JPY is excluded, JPY’s trading pairs must move in the same direction). A combination of selected indices will form currency pairs that will be most interesting for trading.
Why is this approach correct? Correctly predicting the behavior of currency indices you will get a trading pair that will have good traffic dynamics. This solves the main task of choosing a trading pair. In the case of an error in one of the indices, the trading pair will receive a lateral move. When you recognize the error in a timely manner, you can withdraw from the deal with minimal losses. This is an important moment to save your capital.
Our proposed approach to choosing a currency pair is quite simple and solves the main issues that arise when choosing a trade currency pair. From our own experience we can confirm the use of this method for trading. You can see the result in the reports of our trading account.
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