The Worst Offenders: Pairs for Trading
By Tim Shea | September 14, 2007
I’ve been doing some data analysis for FXCM mini accounts over the past year, and have broken down client profitability by currency pair.
The very best pair in terms of client profitability was the AUD/CHF. Unfortunately, it is traded by only a few clients.
The top 5 pairs (of those with significant volume) with the best results for clients are:
- GBP/AUD
- EUR/USD
- EUR/CHF
- EUR/JPY
- EUR/GBP
So, what do they have in common? 4 out of 5 pairs are Euro pairs. Number 6 is USD/CHF, which is often the mirror image of the EUR/USD. With the exception of the GBP/AUD, these pairs are low-volatility and low-spread pairs.
It appears that range trading tends to be more consistent than other approaches. All of these pairs, with the exception of EUR/JPY, spent most of the survey time range-bound. They all feature strong support and resistance lines, giving range bound traders excellent and consistent opportunities over the past year. Strong support and resistance lines also let you trade with tight stops, giving good opportunities to use good money management techniques.
Now, the 5 biggest losers, starting with the worst:
- NZD/JPY
- EUR/CAD
- AUD/JPY
- CAD/JPY
- GBP/JPY
What’s in common here? The JPY. JPY pairs tend to have very high volatility, and can be brutal for many accounts. Most of these currencies are popular carry trade currencies, with often violent sell-offs. When they drop, they drop a
To compare the extreme losses of the worst pairs, you can compare AUD/CHF to NZD/JPY. For every dollar of average net profit on AUD/CHF, there were over $6.20 of losses in NZD/JPY.
Results are based on closed trades on FXCM mini accounts from 6/30/06 to 7/31/07 (13 months); rollover interest is not factored in.
Tags: currency pairs, currency trading, forex trading, forex trading blog, fxcm, worst currency pairs
Topics: What's New at FXCM | 6 Comments »
Adding More Currencies For Forex Trading
By Marc Prosser | August 29, 2007
FXCM has recently added, or is in the process of adding 4 more currency pairs for trading on certain account types. We will shortly be making a press release detailing which ones.
However, the process of deciding which currency pairs to add is a tough one. The question that we face when adding more currency pairs is “Can we deliver the same quality of execution and streaming pricing on the new pairs that our clients expect?”
FXCM gets their prices from banks. While there are hundreds of banks which make a market in the EUR/USD, that is not the case with currencies such as the Thai Baht. If there are only a few banks willing to make a market that means wide spreads in the currency pair, limited liquidity, and usually dealable prices are not available on a streaming basis. As a result, we don’t want to offer these currency pairs to our clients because we cannot offer the same high quality of forex execution that we offer on our existing pairs.
We could offer 100 currency pairs for forex trading but, we choose to offer four new ones and focus on quality execution.
Tags: currency pairs, currency trading, forex, forex blog, forex trading, fxcm
Topics: Don't Trade Like This | No Comments »