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Martin Cole on How To Trade Currency Pairs

Martin Cole on How To Trade Currency Pairs

2 - 3 - minute read

2 - 3 - minute read

Learning how to trade currency pairs is a bit like walking over an old rickety single person suspension bridge. It's safe, and you will get to the other side, but it can be a stressful experience. 

However, don't let that put you off learning how to trade currencies because there are rich rewards to be had. Trading currency successfully can be an excellent way to create a sound financial future.

Currency pairs are traded by the buying or selling of a particular currency pair. Most traded currency pairs, known as the top six currency pairs are EUR/USD - USD/JPY - GBP/USD - USD/CHF - AUD/USD - USD/CAD. You could argue that these are the best and most predictable currency pairs to trade, but many traders successfully trade other pairs. There is no right or wrong, its what suits you.

How to make money trading

When you are trading currency, you are buying or selling one side of what is known as a currency pair.  This is Forex Trading. What you are actually doing is attempting to predict when one currency in a pair will increase or decrease in value relative to the other currency in the pair. That's it!  

If you take the time to learn how to predict the movement of currency markets, then you will have discovered a wealth creation method that will change your life.  

Which are the best currency pairs to trade?

This is an age-old question, but in reality, there is no 'best' pair. There are the most active currency pairs and also the most inactive pairs. The better question is: "Which currency pair is best for me personally to trade and make money with?

At the end of the day, what you require is the ability to successfully carry out trades. How you do that is far more important than what pair you trade.

Sure it does make sense to trade a currency pair that has good liquidity and thereby moves about quite a bit, but many traders trade pairs that are quite slow and lethargic.  They may, of course, be trading these slow pairs because it just suits their own trading style and what they want to achieve. 

One example of this might be that a person might want to buy or sell currency of their own country to protect some savings. They might not even be an active currency trader.

You could, for example, walk into your bank, open a foreign exchange account and transfer some of your local currency into that account. 

In that example, your bank will have made a currency trade on your behalf using the money you had on deposit in your base currency.

What are the best trading times?

Of course, the best trading times are going to be the times when you are available, and you can read and understand the market so that you can turn a profit from your trading. 

The currency markets are said to trade 24 hours a day, and while this is true, the practicalities of trading 24 hours a day simply do not work. 

Many Traders, especially those beginning in currency trading, will look at mechanical ways to trade the markets. These automated trading methods are often known as trading robots. The concept of a trading robot is very appealing, which causes many new traders to get caught up in the belief that they can make money while they sleep.

This is a falsehood and one that can be very financially damaging. Trading robots are not all as they are deemed to be and make no adjustment for the future as they try and recycle the past to mean something the same in the future.

Best currency to trade right now.

Impatience is never a good thing when trading financial markets, especially currency markets. When traders think about trading right now, they are often driven to do so by recent or pending news releases that they anticipate will move the currency market. This method of trading is highly reactive and not really taking into account what may be happening as an underlying cause of the news item.

If you have done your research, you will know that the best currency to trade right now is the one that you have formed a sound and well-reasoned judgement upon. It's far better to be a proactive trader in terms of doing your analysis and looking at your overall trading goals as opposed to being entirely reactive towards flash news stories and financial announcements.

In summary, we can say that the best currency to trade right now is:

1. The currency that you have been tracking for some time

2, The currency that you have analysed with logic and reason.

Best currency pairs to trade at night

Many people first coming to trading will be coming from traditional employment types where there is a requirement to start work in the morning, work through the day and then finish early evening.

These types of working hours leave very little in terms of time to produce extra income or even prepare for a new what could be perceived as a better career. Often people are trapped in jobs that they no longer enjoy because of the inability to find enough time to look into an escape plan.

Initially, when would-be traders start to look at the currency markets as they realise that they trade in a 24-hour cycle, and the reason that they could trade after their traditional work hours. In some cases, this might be possible, but only if you are trading currency that is located in a time zone that is sufficiently offset from your own. As an example: there is likely to be little market movement of the currency in your home country during the early and late evening. But if you locate a currency where your early evening and late evening is that currencies local main business trading hours then you can effectively trade this currency pair at night. There are no best currency pairs to trade at night. If you were to base your trading solely upon the basis of opposing time zones, you would miss many trading opportunities and also expose yourself to sitting in trades that were barely moving. You cannot make money if you are trying to trade a currency market that is not moving up or down.

Most predictable currency pairs

A frequently asked question by traders is which are the most predictable currency pairs? What they actually mean by this question is which are the easiest currency pairs to make money from.

This question is a bit like putting the cart before the horse. You see, it doesn't really matter which currency pair you decide to trade as necessarily there are only three things that a currency market or any financially traded market for that matter can do. A particular currency pair will either trend upwards that is increasing price or trend downwards and decrease in price, or stagnate and oscillate up and down in a tight range of minimal price movement. Since all currency markets will, at some point, be displaying one of those three characteristics, it will be of little value to focus on one particular currency pair.

We need to look at this logically, and the way to do this is to focus on the end result, that is the end result that you as a trader wish to accomplish. Discovering this end result is not difficult at all because the fact of the matter is we should not care whether a market is trending up, trending down or moving sideways.  The single overriding factor for the trader is the expectation of making a financial profit from the act of placing a trade.

What we need to do is to take the question; which are the most predictable currency pairs and exchange it for a question that reads; which is the most predictable currency pair to read and understand future direction. It may seem like a small change in the way in which we are asking the question. But the end result in being able to read and understand the future direction of any currency pair will provide you with the opportunity to create significant wealth.

In summary of how to trade currency pairs.

There are many variables in trading currencies. Time, price and ability are probably the most important. Many traders will fail because there will be a tendency to follow the crowd. The problem with this crowd following, especially in trading currencies is that many traders will distort their beliefs to the point of ignoring reality. This distortion is often seen when a trader holds a trading position that is currently losing money and refuses to cut their losses because of a distorted belief which says, the market will eventually turn. 

Remain flexible at all times with your decisions about what direction you believe a market will move in. Be open to forming an opinion very quickly and then being able to challenge that opinion with what you see as reality on the screen in front of you.

If you have enjoyed this post article have found any parts of interest or things of which you would like a more in-depth explanation you might enjoy my free currency trading course.

Learning how to trade currency pairs is a bit like walking over an old rickety single person suspension bridge. It's safe, and you will get to the other side, but it can be a stressful experience. 

However, don't let that put you off learning how to trade currencies because there are rich rewards to be had. Trading currency successfully can be an excellent way to create a sound financial future.

Currency pairs are traded by the buying or selling of a particular currency pair. Most traded currency pairs, known as the top six currency pairs are EUR/USD - USD/JPY - GBP/USD - USD/CHF - AUD/USD - USD/CAD. You could argue that these are the best and most predictable currency pairs to trade, but many traders successfully trade other pairs. There is no right or wrong, its what suits you.

How to make money trading

When you are trading currency, you are buying or selling one side of what is known as a currency pair.  This is Forex Trading. What you are actually doing is attempting to predict when one currency in a pair will increase or decrease in value relative to the other currency in the pair. That's it!  

If you take the time to learn how to predict the movement of currency markets, then you will have discovered a wealth creation method that will change your life.  

Which are the best currency pairs to trade?

This is an age-old question, but in reality, there is no 'best' pair. There are the most active currency pairs and also the most inactive pairs. The better question is: "Which currency pair is best for me personally to trade and make money with?

At the end of the day, what you require is the ability to successfully carry out trades. How you do that is far more important than what pair you trade.

Sure it does make sense to trade a currency pair that has good liquidity and thereby moves about quite a bit, but many traders trade pairs that are quite slow and lethargic.  They may, of course, be trading these slow pairs because it just suits their own trading style and what they want to achieve. 

One example of this might be that a person might want to buy or sell currency of their own country to protect some savings. They might not even be an active currency trader.

You could, for example, walk into your bank, open a foreign exchange account and transfer some of your local currency into that account. 

In that example, your bank will have made a currency trade on your behalf using the money you had on deposit in your base currency.

What are the best trading times?

Of course, the best trading times are going to be the times when you are available, and you can read and understand the market so that you can turn a profit from your trading. 

The currency markets are said to trade 24 hours a day, and while this is true, the practicalities of trading 24 hours a day simply do not work. 

Many Traders, especially those beginning in currency trading, will look at mechanical ways to trade the markets. These automated trading methods are often known as trading robots. The concept of a trading robot is very appealing, which causes many new traders to get caught up in the belief that they can make money while they sleep.

This is a falsehood and one that can be very financially damaging. Trading robots are not all as they are deemed to be and make no adjustment for the future as they try and recycle the past to mean something the same in the future.

Best currency to trade right now.

Impatience is never a good thing when trading financial markets, especially currency markets. When traders think about trading right now, they are often driven to do so by recent or pending news releases that they anticipate will move the currency market. This method of trading is highly reactive and not really taking into account what may be happening as an underlying cause of the news item.

If you have done your research, you will know that the best currency to trade right now is the one that you have formed a sound and well-reasoned judgement upon. It's far better to be a proactive trader in terms of doing your analysis and looking at your overall trading goals as opposed to being entirely reactive towards flash news stories and financial announcements.

In summary, we can say that the best currency to trade right now is:

1. The currency that you have been tracking for some time

2, The currency that you have analysed with logic and reason.

Best currency pairs to trade at night

Many people first coming to trading will be coming from traditional employment types where there is a requirement to start work in the morning, work through the day and then finish early evening.

These types of working hours leave very little in terms of time to produce extra income or even prepare for a new what could be perceived as a better career. Often people are trapped in jobs that they no longer enjoy because of the inability to find enough time to look into an escape plan.

Initially, when would-be traders start to look at the currency markets as they realise that they trade in a 24-hour cycle, and the reason that they could trade after their traditional work hours. In some cases, this might be possible, but only if you are trading currency that is located in a time zone that is sufficiently offset from your own. As an example: there is likely to be little market movement of the currency in your home country during the early and late evening. But if you locate a currency where your early evening and late evening is that currencies local main business trading hours then you can effectively trade this currency pair at night. There are no best currency pairs to trade at night. If you were to base your trading solely upon the basis of opposing time zones, you would miss many trading opportunities and also expose yourself to sitting in trades that were barely moving. You cannot make money if you are trying to trade a currency market that is not moving up or down.

Most predictable currency pairs

A frequently asked question by traders is which are the most predictable currency pairs? What they actually mean by this question is which are the easiest currency pairs to make money from.

This question is a bit like putting the cart before the horse. You see, it doesn't really matter which currency pair you decide to trade as necessarily there are only three things that a currency market or any financially traded market for that matter can do. A particular currency pair will either trend upwards that is increasing price or trend downwards and decrease in price, or stagnate and oscillate up and down in a tight range of minimal price movement. Since all currency markets will, at some point, be displaying one of those three characteristics, it will be of little value to focus on one particular currency pair.

We need to look at this logically, and the way to do this is to focus on the end result, that is the end result that you as a trader wish to accomplish. Discovering this end result is not difficult at all because the fact of the matter is we should not care whether a market is trending up, trending down or moving sideways.  The single overriding factor for the trader is the expectation of making a financial profit from the act of placing a trade.

What we need to do is to take the question; which are the most predictable currency pairs and exchange it for a question that reads; which is the most predictable currency pair to read and understand future direction. It may seem like a small change in the way in which we are asking the question. But the end result in being able to read and understand the future direction of any currency pair will provide you with the opportunity to create significant wealth.

In summary of how to trade currency pairs.

There are many variables in trading currencies. Time, price and ability are probably the most important. Many traders will fail because there will be a tendency to follow the crowd. The problem with this crowd following, especially in trading currencies is that many traders will distort their beliefs to the point of ignoring reality. This distortion is often seen when a trader holds a trading position that is currently losing money and refuses to cut their losses because of a distorted belief which says, the market will eventually turn. 

Remain flexible at all times with your decisions about what direction you believe a market will move in. Be open to forming an opinion very quickly and then being able to challenge that opinion with what you see as reality on the screen in front of you.

If you have enjoyed this post article have found any parts of interest or things of which you would like a more in-depth explanation you might enjoy my free currency trading course.

How To Trade Currency Pairs

How To Trade Currency Pairs

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