Are You Trading The Wrong Market?

There are so many different currency pairs and financial instruments that you can trade on any given day.  It is critically important that you figure out which ones are going to be the most active, which ones are going to make the breakouts, which ones are going to be trending, and which ones are going to make the cleanest, sustainable moves.  If you end up trading a currency pair or financial instrument that is stuck in a range, while other currency pairs are making big clean moves, then you are leaving A LOT of money on the table.  Your trades in the choppy markets may break even or stop you out, while if you were trading the markets that made the big clean moves, you would of made a killing.

A lot of people are trading choppy markets for some strange reason.  They see the big moves happening in other markets but still persist in trading the choppy currency pairs.  It could be perhaps they think the other currency pair will play catch up, or they think they know something that will make the currency pair breakout.

There were plenty of traders who today were trying to trade USD/CAD which was stuck in a 50 pip range.  Some of them were trying to trade USD/CAD with chart patterns or technical indicators, or whatever sort of system they have.  Making a lot of money in a 50 pip range is extremely difficult.  Even if you were perfect and caught the exact high and low that is only a 50 pip move.  And that is a stressful 50 pips as the market was bobbing in and out of profit.

You could of made a lot more money trading EUR/USD or GBP/USD or USD/CHF today.  Nice clean moves.  I learned many years ago that it is a lot easier making a lot of money when the market makes a nice clean trending day.  Making a relatively stress free 100-150 pips profit for the day is a heck of a lot easier than trying to struggle catching the highs and lows of a range bound choppy market.

True order flow day traders do the proper research to determine which currency pair stands the best chance of making a nice clean sustained move for one day, or over the course of a few days.  You don’t want to get stuck having a position open in a choppy market when there are a plethora of other opportunities out there for you.

You also need to pay close attention to correlations and the potential themes in the market.  Just because they exist doesn’t mean they can’t be broken or break down for a day or more.

For example today the U.S dollar depreciated substantially.  That usually means the commodities should go higher.  Silver only rallied a little bit.  Gold did rally and breakout substantially while Crude Oil was stuck in a tight range.  There were plenty of people trying to play a bounce higher in Crude Oil but it was choppy.  Those crude oil day traders could of posted FAR superior returns if they had traded gold for the day.  Inefficiencies galore.

Don’t have tunnel vision.  Be flexible.  Search for many different opportunities and order flow generators in a variety of markets and financial instruments.  Find the nice, big, clean trending moves both on a intraday and swing trading basis.

And I have just given you a very big secret.

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