Higher Edge After Switching To Less Crowded Markets

[Fundlord]

I made most of my money solely trading EUR,GBP,JPY,AUD,CAD against the dollar.

I assume that there would be a large number of amateurs and professionals in these markets.

Would going further down the food chain make it more or less difficult to make a profit as there would be far less amateurs say trading the RUBLE, South African Rand, Norwegian Krones

Most Traded = Major/USD - Eur/Usd
2nd Most Traded = Major/Major - Gbp/Jpy
3rd Most Traded = Major/Exotic - Usd/RUB
Least Traded = Exotic Vs Exotic - RUB/ZAR - Most brokers don't offer these.

Apart from the slightly wider spreads which doesn't matter to my style of trading is there more or less edge in more exotic, less traded markets ?

 

[xandman]

Less correlation than the majors. Though. I am interested to know what style of trading isn't affected by spreads. Exotics have extreme spreads.

 

[Fundlord]

Less correlation than the majors. Though. I am interested to know what style of trading isn't affected by spreads. Exotics have extreme spreads.

The transaction cost of the spread doesn't eat into my profit. A 0.2 pip spread on 300pip profit trade doesn't affect me. Even if it were 5 pips it wouldn't. I don't day trade unless my profit target gets hit the same day I put my trade on.

 

[blakpacman]

In Market Wizards, Bruce Kovner said there better opportunities in less observed currency pairs.

 

[galvinlee888]

In Market Wizards, Bruce Kovner said there better opportunities in less observed currency pairs.

Agree

 

[loyek590]

try in in paper account and see how it goes. That's what I did and that's why I don't trade that NOK anymore.

 

[Sergio77]

The transaction cost of the spread doesn't eat into my profit. A 0.2 pip spread on 300pip profit trade doesn't affect me. Even if it were 5 pips it wouldn't. I don't day trade unless my profit target gets hit the same day I put my trade on.

How long did you trade. If you trade long enough and unless you have a major edge the spread will eat up all your money. It is simple math. Just read this.

 

[mymajia]

How long did you trade. If you trade long enough and unless you have a major edge the spread will eat up all your money. It is simple math. Just read this.

How long did you trade. If you trade long enough and unless you have a major edge the spread will eat up all your money. It is simple math. Just read this.

And also the overnight cost.

 

[xandman]

OP does trades close to a weekly duration. Definitely doable. It's just so mentally debilitating when you have to make a quick exit when the spreads are wide.

In forex, I won't trade if the spread > 2% of the pip profit target. A lot more stringent on high% winning strategies because of the low average profit.

 

[Handle123]

I prefer the currencies futures as they have options to hedge my trades. Can always expect one tick plus spread in futures unless you use limits. I do have an accounts in forex for reports that will make currencies move, sometimes one or the other have slight hesitation right after report to get trade off, but the exotic spreads, pips just too wide for my style of trading, and slippage on stops I can only guess could be large at wrong times. If you looking for 100 pip or greater move, then 10 pip spread won't hurt too often. I do day trade some litely covered commodities and moves can be incredible like in Coffee, Cotton and OJ, but when you have to get out, there is a price to pay as volume dries up.