CURRENCY PAIR CHOICE
Above we listed the currency pairs you should limit yourself to scalping based
on the criteria of their pip spreads. There are a few other factors that are
worth looking at.
In my other eBooks I have repeatedly alluded to the fact that each currency
pair exhibits it’s own personality. It is important to be familiar with the
“personality” of the currency pair(s) you intend to trade so that you can
develop an almost intuitive feel for how it tends to behave. The only way to
cultivate this recognition is to study the charts of the currency pair for a while
(at least a month). I can’t stress enough to you the importance of keeping
your eyes on the charts to become familiar with the pair’s behavior.
At the time of this writing (remember that when you read this the Brokers
might have already changed the spreads) there are two currency pairs that
have a 3 pip spread; EUR/USD and EUR/GBP. Due to the fact that they have
the lowest spread makes them the ideal candidate for scalp trading. There is
however a significant difference between them that makes one more ideal than
the other.
If you watch the charts of EUR/GBP you’ll quickly notice that it’s
“personality” is that it usually moves by very small increments. In general I’d
say that this pair is relatively stable (compare to most other pairs). Many
times it seams to bounce around in very tight ranges, often within 5
pips. Looking at the one-minute charts it appears “fuzzy” due to frequent
bouncing within a tiny range. This makes EUR/GBP difficult to scalp. There
are a few instances when it is worth trading (like when either EUR or GBP
has just released a Fundamental Announcement), but as a general rule
(meaning there are exceptions) it is simply best to avoid scalping this pair.
EUR/USD also has a 3 pip spread, but it is far less “fuzzy” in comparison to
EUR/GBP, and it tends to trend very nicely (even compared to the other
pairs). For these reasons EUR/USD is by far the single best currency pair to
scalp. Most of your scalping should be restricted to this currency pair.
What about the other pairs? You can certainly trade them too. Become
familiar with the personalities of each one and you’ll soon discover that you
have personal preferences for one or two pairs more so than the others. This
becomes a matter of personal preference usually based on which one(s) appeal
to you more and because you have “figured out” their behavior patterns
enough to more consistently be profitable with those pairs.
So your primary scalping pair is EUR/USD, but pick a couple of the 4-pipspread
pairs to be your secondary scalping pairs. In certain circumstances
(which will be elaborated upon later) you could scalp some of the 5-pipspread
pairs, but these won’t be part of your usual routine. In virtually all
circumstance you should completely avoid scalping any of the larger-pipspread
pairs.
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