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cowpip

Trading Cross Currencies

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I have been meaning to ask this for some time, but it just hasn't come out. For almost the entire time I have learned forex (now almost a measily 2 years), I have fixated on the major dollar currencies. I've paid a little attention to the crosses (particularly eur/gbp), but not much. I wanted to learn one currency (cable) really really well, and fixating on one was probably a good move for me when I started learning this stuff. But...

 

I am a bit of a fraidy-cat when it comes to the crosses, because I fear that I have to learn their personalities before I can trade them. Is this true? I imagine they each have their own personalities and quirks, but do you really have to learn those personalities before you can trade them?

 

Texxas - you mentioned in one of your recent posts (here) that the same setups and signals apply. That is encouraging. I would like to start moving out into other crosses. I've been such a cable-nut for so long, the main question I have is whether what I have learned on cable can be directly applied elsewhere.

 

I know fibs apply everywhere, but do they apply with the same force on the crosses?

 

I think I remember you telling us not long ago that the 35/50 S/R levels you compute were researched and applied mostly on the dollar majors, so is it safe to assume that they don't apply on the crosses as well?

 

And I don't know very much about how the crosses respond during lower liquidity periods. I suppose it's the same deal there as it is on the majors - more spikey/noisy than when the volumes are higher.

 

When I look at that gbp/chf chart you posted (here), I scratch my head and wonder why I insist on keeping my head buried inside a hole. I think it's time to lift my head up and look around.

 

Thanks so much for pointing this out. If you (or others) have any important things I should keep in mind when looking at / trading the crosses, I would (as always) be in your debt.

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I am a bit of a fraidy-cat when it comes to the crosses, because I fear that I have to learn their personalities before I can trade them. Is this true?

 

Texxas - you mentioned in one of your recent posts that the same setups and signals apply. the main question I have is whether what I have learned on cable can be directly applied elsewhere.

 

I know fibs apply everywhere, but do they apply with the same force on the crosses?

 

I think I remember you telling us not long ago that the 35/50 S/R levels you compute were researched and applied mostly on the dollar majors, so is it safe to assume that they don't apply on the crosses as well?

 

 

I'll answer your direct questions first, then elaborate on the generics second.

 

Yes, each of the currency candidates possess distinct personalities, due mainly to the extremes of their specific range parameters, unique fundamental elements & volume attraction. However, if your strategies or basic tool-kit revolves around pure price action sprinkled with a good dose of Math based ingredients, you'll find similar opportunities across most of the instruments.

 

Those % (35/50) s&r guides apply ONLY to the main 2 european pairs, yes. Those are the only pairs we'll trade via a "range based" trigger, again due to their volume attraction & high degree of emotive reaction - "herd attraction" ;)

 

We were raised & instructed from a young age on the principles of mathematical sequences. Price instruments, over whichever set of candidates you choose to observe, display general parameters of tradeable sequences.

 

Fibonacci & pivot based s&r variables have been around for years. All we do is scan a candidate & eyeball a Weekly or Daily timeframe snapshot. If price is backing onto, or reacting against a defined Fib or % based zone, we’ll zoom in & inspect that candidate further, plotting the exact lines from the tools available on our charting platform.

 

We’ll then look for accompanying (hard price based) s&r lines which marry up that zone of interest. Our 3rd item on the tick list of confluence will be the price footprints. If price action is grouping & setting up according to our ideal parameters (ie: doji’s/spinning tops/engulfing bars etc), displaying exhaustive or neutral emotive behaviour at a defined key zone of interest – we then have a possible trade set-up.

 

A case of then waiting for the ideal opportunity to engage: using our size, stops & r/r tools. It’s the same overall template for whatever we trade. No difference, no complicated variables, nothing to confuse the psyche etc. Just plain & simple repetition.

 

We know it works because we’ve utilized these simple confluence tools for years. Why re-invent the wheel? You’ve witnessed & followed Buk’s work (much of it in live scenario’s) 1st hand over the past few years Cary, has it changed much at all? Myself, Tess, Shona & Lorie all follow similar routes. We hate making life hard for ourselves, & there’s no point. If an instrument isn’t playing ball, we simply look for one which is. If nothing’s occurring, we remain flat until one offers a possibility or a probable opportunity.

 

Obviously, these specifics suit our style, personality & trading objectives. They won’t suit all tastes, & if not – then an alternative set of tools will need to be utilized for your own working template(s).

 

But whichever tools you use, try keep them nice & basic….and simple.

 

Like I said in the prev thread, the GBP is attracting strong attention, due in part to it's positive fundamental play. Pair it against a candidate which offers a decent (& extreme mix of interest rate/economic variable) tradeable risk & you can then hone down your strat tools to spot opportunities?

 

Such is the case with GBP/YEN. Just scoot thru your Weekly-Dailies to see the reaction to the fundamental plays.

 

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