Updated: Jan 17
Currency Pairs are a product.
They are the names behind our most significant losses and winners.
Much like my quick 45-minute scalp session and analyzed winners on two SPX500 this morning and one loss on EURUSD.
When people ask things like:
"What's the best currency pair to trade? Are you buying this? Are you selling that?"
It convinced me trading was more than picking one or two pairs to trade. It involved research in answering why the pair is worth trading.
"You have to trade one currency pair. This pair is the best!"
I stopped overanalyzing one pair and began focusing on multiple currency pairs. Those numerous currency pairs are now organized into sections.
Each pair helped me focus on long-term swing trades that led to me holding a multitude of one hundred-plus pip trades instead of being overwhelmed with trading fewer pairs getting whipsawed to and fro on lower timeframes- which is what you want to avoid as a beginner trader.
" You must trade the London session and day trade to make money."
So I doubled down on the daily timeframe- less time for one chart, less time analyzing, and the ability to hold fewer trades to reduce my risk exposure.
Lesson: if you want to be a good trader, focus on what will work long-term versus seeking instant gratification.
Instant gratification leads to two things:
Losing fast with no understanding of how to make money back
Seeking to make money back quicker with the chance of losing more.
The greatest thing I did for myself was learning how to swing trade. I didn't care what other traders said. It worked for me.
Is it slow sometimes? Yes.
But, the ability to research the currency pairs I choose to trade weekly had made my success in trading more fulfilling than when I first began trading.
I get to build my future vision for my trading career steadily:
4-8 hour work week
The flexibility to choose what I trade without feeling stuck on one currency pair that may not be in season to trade
The ability to withdraw money in my good seasons. I'm not interested in a fancy lifestyle, so I don't need much.
I have enough time to pursue things in life in other parts, such as coaching my son's basketball team( yeah, I ball!), self-development, and enhancing my spiritual and physical energy.
I am not relying on anyone else(co-workers, employees, or micro-managers) for my success.
Researching Currency Pairs
Choosing what currency pairs to trade each week works in a cycle.
It first starts with organizing my watchlist. Then, it's organized into sections based on the quote currencies and correlation, if there are any.
This helps me analyze what pairs I can trade in the same direction, opposite of one another, and from there, I can choose the best out of each section.
NZD Quote pairs look like this:
Quote currencies are currencies that are the second currency within the currency pair.
These currencies share the New Zealand dollar currency. Meaning these currency pairs have a high probability of sharing the same movement based on fundamentals and price movement.
My job is to analyze which pairs have the best price movement and fit the rules to my strategy.
I go through a no, yes, yes, and yes process.
I quickly want to say NO to any pair that is not trending. Trending means the price is moving in a clear visual uptrend or downtrend, and I can see a pullback within the price fluctuation.
If the price doesn't show a pullback, I dismiss it.
But, if I say YES, the pair is trending, and I can see the price pulling back, I agree that this pair moves on to the next phase in my process.
The Entry Has To be Close
I often hear traders say they enter trades too late or too early.
The first thing that comes to mind is where you decided to enter. If you are entering a trade too early, chances are the price wasn't near the structure you placed on the chart. If you are entering a trade too late, chances are the price reached where you wanted to enter, but you didn't enter the trade, and now you're playing catch up by entering a candle or two too late.
I've been there. This can be a timeframe or mental error.
Honestly takes time to learn how to fight for the best price(SMB CAPITAL phrase).
Once I agree that a currency pair is trending, I plot my estimation zone automatically.
I'm often asked how I know where to place my zone. It's a combination of 3 things:
Price direction and one price action candlestick(Hence why I have to know the direction of price movement first.
How far is the price from my zone in the pullback stage( I like deep pullbacks hence why I use price note tools. (11 tools I use to trade blog))
The psychology of the participants in the market(supply and demand)
I'll be honest; in my opinion, I genuinely believe I have one of the most simple trading systems out there when researching what currency pairs I decide to trade.
It just works.
So when I plot my zone, and one zone is all I need, I begin to see which pairs are closest to my zone on the currency pairs that pass the trend phase.
If a pair is nowhere near my entry, I immediately dismiss the pair.
But, if the pair is close to or at the zone, I know it goes onto the next phase.
It Has To Be Worth The Risk
Early in 2022, I began teaching on pending orders.
A student bought up the topic. I knew a lot about limit orders and was glad I got to teach the subject.
When I saw how amazing it would be as an addition to my TMP strategy, we immediately began backtesting the results.
What we found was remarkable.
I usually say a trade from beginning to end is a 15-minute process. Heck, way less than that, but it goes like this:
5-minute analysis time- the time it takes to analyze a price chart
5-minute journaling time- the time it takes to journal the trade
5-minute entry time- the time it takes for you to wait for the candle to close to enter the trade and place the entire order
Now, this doesn't count for the time you are holding the trade, but the work takes less than 15 minutes,
When we discovered we could set pending orders at the estimation zone, the work time decreased dramatically.
Now, all we have to do in one setting is disqualify or qualify a trade, plot the estimation zone, set the stop loss, take profit, and observe the risk to reward.
Now, there is one last qualifier here: the risk to reward. If the price does not have more than a 1-1 risk to reward, it does not get traded.
But, in the situation where it does, the pending order is set, and I'm done.
It's a Repeated Process
The best thing for my strategy was to repeat the same steps over the past few years and listen to any feedback or questions that would improve it.
This allowed me to be vulnerable and trade without overthinking. Also, to teach without personal conviction.
You are the qualifier and disqualifier. When you say no, yes, no, yes, you are deciding what currency pairs are worth the risk—only you.
I know it can be scary. That's why you reach out to other traders for help or want to know what they trade. You want to know you're not alone in your thinking and that you're on the right track.
I get it. But, if I'm being honest, it removes your identity as a trader.
Raising Your confidence
Every currency pair I analyze goes through the same TMP process.
Researching a currency pair is about taking the emotions out of trading and not just trading its popular name.
It's all about the movement of the pair and if it agrees with your analyzing process.
The more you see your no's work. The more you see your yes works. The more you can view the outcome of the trade through, the higher your confidence in yourself will rise.
Research isn't about anyone else. It's all about you, and you don't need anyone to agree.
You need your trades to show you if you were right or wrong. That's what's going to help you solve your trading problems. Solve that, and you will be on the path to fixing your money problems.
Research is the puzzle piece.
The currency pairs are the whole picture you're trying to put together.
TMP strategy is there to help you speed up your analysis, provide confidence, and help you qualify your best setups.
You have to be ready to want to be a better researcher to make this work.
So, if you're tired of questioning how to choose the best currency pairs to trade weekly and how to see how TMP fully works, consider joining my Trade on Purpose community.
What's Happened This Week?
In honor of MLK day, I made my trading community, Trade on Purpose, almost half off. You can join the monthly membership for $99. The original price $197 a month. This is the last day to join at this price.
So, if you are ready to get access to me as your trading coach and be able to see what I trade and how I trade and how you can trade the same skillset, this is your time to do so.
In this week's Coaching Call, I'll discuss how you can quickly update and adapt to new price movements after winning or losing a trade per the weekly, monthly, and daily timeframes. In addition, this strategy will help you quickly adapt to trend continuation or reversal price movements.
See, you get classes like this when you are a part of my trading community. It would be best if you didn't miss out, so watch the video modules to learn my TMP strategy and join my Thursday Coaching Call.
See you on the inside.