Learning Forex – Why Should you Trade a Limited Number of Instruments? - Forex News by FX Leaders

Learning Forex – Why Should you Trade a Limited Number of Instruments?

Posted Tuesday, December 25, 2018 by
Arslan Butt • 2 min read

It’s been such a lovely day – it’s Chrismas fellas and I hope you are having an awesome time. The holidays offer us an opportunity to learn new things and that’s what I’m going to try in this update.

Today’s topic is about why you should trade only a few instruments, rather than 10 – 15 instruments. I think you should trade one-two markets that you are intimately familiar with, which you can trade more often than others. Let me share my personal experience.

Reasons for Trading Fewer Instruments

Familiarity – Fellows, you will observe that when you are trading one instrument on daily basis, you start feeling the intimacy with the particular currency pair. For instance, being a lead commodity analyst, I trade Gold on a daily basis and every time I see the Gold chart, I feel really relaxed. Maybe that’s why I have the highest success rate in Gold.

Technical Patterns – When I talk about familiarity, basically my focus is on multiple things. One of them is technical patterns. It’s really easy to remember the price, support, resistance and technical patterns of one particular trading instrument rather than 15 different currency pairs.

Thus, as soon as you see the chart of that particular trading instrument, you already know where your entry should be. All you need is to wait for it.

Fundamentals Clarity – It becomes really hard to monitor the fundamentals for the whole forex market. But on the other hand, if you are trading a limited number of currency pairs, you always know what’s going on in the market and which particular news is likely to impact your favorite currency pair. So, it’s like having full control over the movement of prices.

Confidence – Buddies, when you are following only one or two currency pairs, you start to understand their trading behavior and the way the market moves. So, ultimately you will feel more confident in your trading decisions than in the case of monitoring or trading 10 to 20 currency pairs.

Summing up – Just take your time to identify one or two currency pairs. Understand their behavior for a month or so and practice paper trading on these specific currency pairs until you feel confident about your trading. Of course, you shouldn’t put all your real money in at once, but practice with real money to gain more confidence and then time will be yours!

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