Need Pair Selection Methodology

[GoldDigger]

However I am willing to explore screeners if you think they would help, do you have any suggestions?

You need to know whether what you are
getting into is on an upward trajectory
and screeners can help with that, as well
as looking at historical data.

Currency screeners are all over the place.

Finviz

Yahoo

Trading View

Those are free, and there are paid ones
as well.

Your broker might have one also.

 

[Tradess0610]

I want to know how professional forex traders choose which pairs to trade. Right now I'm following all majors, major crosses, metals, and indices offered by my firm. That's 36 instruments. It feels like too much. I need a proven methodology backed by evidence for shortening this list.

I usually trade the london and new york sessions on 1h/4h/D timeframes.

Not sure if I understand you correctly. With professional forex traders you are talking about the ones employed at institutions or are you talking about fulltime retail traders (for which this is also their primary source of income)?

I trade 4 pairs regularly, 3 more I watch and might enter a trade. I am a daytrader - in the morning i mark the charts, set the alarms and then wait that price reaches my levels.

I would never be able to stay focussed if i were watching 30 pairs.
Also, with watching less pairs you get to know their patterns better...

 

[alistera]

I want to know how professional forex traders choose which pairs to trade. Right now I'm following all majors, major crosses, metals, and indices offered by my firm. That's 36 instruments. It feels like too much. I need a proven methodology backed by evidence for shortening this list.

I usually trade the london and new york sessions on 1h/4h/D timeframes.

You pick one you know/can align with, most choose GBPUSD/EURUSD/USDCAD/JPY Pair and make profits, pick too many and you will be a jack of all trades and master of none, the markets will love you for it, as you make profits you can add more then when it goes wrong you hope you kept 20% or 50% of the profits, not 80%, and went back to one pair faster than slower, this is how you make profits slowly and everything else will be how you lose money slowly then all at once, the world is an expert at the latter advice because it's how they make their profits slowly.

 

[maxinger]

I want to know how professional forex traders choose which pairs to trade. Right now I'm following all majors, major crosses, metals, and indices offered by my firm. That's 36 instruments. It feels like too much. I need a proven methodology backed by evidence for shortening this list.

I usually trade the london and new york sessions on 1h/4h/D timeframes.

Are you talking about the intermarket correlation thing?

 

[JonLivingston]

Within g10 you may have 1-3 traders covering 2-6 pairs within coverage

How do they "cover" the pairs?

 

[longandshort]

How do they "cover" the pairs?

Cover means that they facilitate the buying and selling of those currencies, and will also provide market color.

I should note that banks and most pros aren’t making markets in spot… for cash markets, almost everything is electronic so just post bid/ask or trade via screens. However, most corporate buyers are doing forwards which requires a market maker (because each forward is otc). Swaps and exotic payouts are also otc, so there will be a trader who covers (provides a market) for that kind of trade (“fx derivatives trader”).

 

[JonLivingston]

Cover means that they facilitate the buying and selling

Do you mean something a là "Hey big bank, I'd like some GBP" and then big bank is like "Sure corp, how much and at what max price you would like it?"

and will also provide market color

And by this you mean that will give their opinion on how things are going/might go? What do you mean by "market color"?

 

[longandshort]

Do you mean something a là "Hey big bank, I'd like some GBP" and then big bank is like "Sure corp, how much and at what max price you would like it?"

literally yes, except that the corp is asking for quotes from 3-5 firms so you have 20 seconds to get back to them.

And by this you mean that will give their opinion on how things are going/might go? What do you mean by "market color"?

Yes, e.g. “we just saw an order to buy 50k options on dollar-nokkie” to a trader (either at the corp treasury team or buy side trader) who is interested in the name. Why are traders interested? Because they care about liquidity. If I need to sell a bunch of a currency and am hearing that there could be a big buyer out there, I’ll be asking the bank to see if we could arrange a deal.

 

[JonLivingston]

literally yes, except that the corp is asking for quotes from 3-5 firms so you have 20 seconds to get back to them.

Thanks for confirming. But here's another question: how does trader of big bank know that he can fulfil corp's order, in 20 seconds? Big bank picks it up from its own reserves? If so, what if there's not enough? And I assume this whole process happens because corp has a direct route to big bank right? As in, they have literally an account with them?

“we just saw an order to buy 50k options on dollar-nokkie” to a trader (either at the corp treasury team or buy side trader)

How would big bank trader see this and where? Especially as you say it's "at the corp treasury team"? You referring to big bank trader having access to corp account and balances and movements of resources in/out of their account?

interested in the name

What do you mean by "name" here? The currency pair in question (dollar-nookie)?

Thanks

 

[destriero]

Thanks for confirming. But here's another question: how does trader of big bank know that he can fulfil corp's order, in 20 seconds? Big bank picks it up from its own reserves? If so, what if there's not enough? And I assume this whole process happens because corp has a direct route to big bank right? As in, they have literally an account with them?


How would big bank trader see this and where? Especially as you say it's "at the corp treasury team"? You referring to big bank trader having access to corp account and balances and movements of resources in/out of their account?


What do you mean by "name" here? The currency pair in question (dollar-nookie)?

Thanks

“Dollar Nookie” is the relative value of the outcall service provided.