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I have recently trimmed down the forex pairs that I follow/trade to just 6 pair... They are $AUDJPY, $EURJPY, $GBPJPY, $AUDUSD, $EURUSD & finally $GBPUSD
I find that these 6 pair seem to react to market conditions consistently in the same manner. Either all going up at pretty much the same time or all going down pretty much together...
To me they also seem to be fairly closely correlated to the equity markets. At least for now...
Also... since they are all either yen crosses or dollar crosses they seem to simplify the amount of information that I need to be aware of throughout the course of the day...
They allow me to concentrate on only dollar strength/weakness (Yen pretty much following the dollar) and current market direction.
In other words if the dollar is weak and the market is up I try to consider only long positions with these. If the dollar is showing some strength and the markets are weak then I look only to sell.
Also I have begun to try to shoot more for a high percentage of small winners rather than longer term trades. This forces me to focus and concentrate on the trade at hand.
I guess the main point I'm trying to make is that if you can simplify your trading by correlating it to a couple of simple things that are easy to follow then that should at least help insure that you are trading in the right direction most of the time...
Hope this helps someone/anyone think about the markets in a clearer manner ;)
Greg
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