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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: 

1. GBP/AUD
2. EUR/USD
3. EUR/CHF
4. EUR/JPY
5. 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: 

1. NZD/JPY
2. EUR/CAD
3. AUD/JPY
4. CAD/JPY
5. 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.

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6 Responses to “The Worst Offenders: Pairs for Trading”

1. The Worst Offenders: Pairs for Trading - Personal Finance Says:
   September 14th, 2007 at 9:21 am

   […] Worst Offenders: Pairs for Trading unknown wrote an interesting post today onHere’s a quick excerptResults are based on closed trades on […]

2. xiao Says:
   September 20th, 2007 at 10:46 am

   Great piece of article which was well researched. Keep it up!

   Cheers

3. Pablo Mabazza Says:
   November 11th, 2007 at 7:23 pm

   I just accessed your website today and I am interested in getting more knowledgeable about Forex Trading. I just read your observation that one of the ” most profitable currency combination ” to trade is that
   AUD/CHF but only a few trade in it. Is it because of volatility or is it just a lack of awareness on the part of traders?

4. admin Says:
   November 14th, 2007 at 1:45 pm

   I think it’s chiefly a lack of awareness. Australia and Switzerland are both small countries on opposite sides of the world. Their relationship is not often thought about, nor their currencies often directly traded. When new traders enter the markets, they start with the big currencies, EUR/USD, USD/JPY, GBP/USD, USD/CAD, etc. These are the currencies they know well. I think the only people who regularly trade AUD/CHF are traders who’ve tried many different pairs for months or years, and found that they like AUD/CHF the best.

   - Tim Shea

5. Idetrorce Says:
   December 15th, 2007 at 9:01 am

   very interesting, but I don’t agree with you
   Idetrorce

6. Jon Says:
   June 3rd, 2008 at 4:52 am

   Most brokers do not offer AUD/CHF or GBP/AUD. That’s the reason.

Comments