Most Traded Currency Pairs

Most traded currency pairs

Hello traders, in this lecture, I will share with you what is the plan that I follow while trading with the portfolio Expert Advisors, which are the most traded currency pairs, and why I use these major Forex pairs in my trading. Moreover, I will share with you what timeframes I select for my trading.

For this trading portfolio, I have selected the GBPUSD, the EURUSD, and the EURGBP. I will tell you why.

Most traded currency pairs in 2019
Most traded currency pairs in 2019

For the previous year, you can see above that the EURUSD was the most traded currency pair with 24%. Secondly is the USDJPY with 13.2%, and the third is the GBPUSD with 9.6%.

These 3 are not just the most trader currency pairs for the last one year. Usually, these are the most traded currency pairs in general. My trading is around these Forex major pairs. The Aussie (AUDUSD) which is in fourth place with 5.4%, USDCAD with 4.4%, together with the NZDUSD are known as commodity currency pairs.

Their value quite often depends on the export and the import of these countries. Sometimes there are unexpected moves. For example, the USDCAD is very closely related to the price of the oil, because one of the main exports of Canada is oil.

Usually, I stay away from these Forex currency pairs when I do portfolio Expert Advisors. This is because I really don’t want to combine trading with the Expert Advisors with the fundamental analysis. I can do that, but especially for beginner traders, it’s quite difficult. I don’t want to get into these details.

EURUSD leads the most traded currency pairs

So I have selected the EURUSD, which is definitely the number 1 most traded currency pair. Moreover, I have selected the GBPUSD, which is the third. In addition, I have selected the EURGBP so I can have equal exposure. Because in EURUSD, I have one time the EUR, I have one time the USD.

In GBPUSD, I have one time the GBP and one time the USD. Meaning I have 2 times the USD, 1 time the EUR, 1 time GBP. And when I add EURGBP, I will have for the second time EUR, and I will have the second time the GBP. Each currency appears twice in these pairs. In total, 3 currency pairs, 3 currencies, and equal exposure.

This is something we have discussed with many of the students and recently with my colleague Ilan, that it is really important to keep equal exposure between the different currency pairs. Quite often, the mistake is that the traders test many Expert Advisors and strategies, like dozens or hundreds, and they take the top 10 performers, for example.

Equal exposure

But quite often, the top performers are all with the USD. It could be EURUSD, GBPUSD, and USDJPY. If you place these top performers on your live account, you will have huge exposure to the USD because it is in each currency pair that you trade.

Let’s say you are testing many of the Expert Advisors from our courses on a Demo account and you take the top 20.

I would suggest you take, for example, 5 from EURUSD, 5 from GBPUSD, 5 from EURGBP, for equal exposure. It’s not necessary to choose the Forex major pairs. If you want to have 5 from USDJPY, you need to have 5 from EURJPY as well or from GBPJPY so you have equal exposure between the different currencies. I hope that’s clear.

It’s quite important because if you select to trade Expert Advisors only with the USD and there happens to be a dramatic change in the price in one day or in a week with the USD, it might affect the whole portfolio negatively, something we want to avoid.

But when we have 3 currency pairs, even if the USD, for example, has an unexpected move, then EURGBP will not be really affected by that. You will not have that risk in your account.

Stay with me to learn more about algorithmic trading with the most traded currency pairs

For the purpose of this course, I have selected to use GBPUSD, EURUSD, and EURGBP. They have equal exposure, and I have selected to use the H1 timeframe.

This is one of the timeframes that I like the most. Not that I’m a fan of this timeframe. But after testing so many strategies and Expert Advisors during the years, H1 is very suitable for algorithmic trading, especially for the beginners, to follow the results.

I will be sharing these strategies and these portfolio Expert Advisors with you. That’s why I have selected the H1 timeframe because I find it very suitable for both beginners and advanced traders. What I will do in the next lectures of this course is to show you how I create the Expert Advisors, how I test them for one month, and how I place them for trading in my accounts.

This is what I do all the time. I create Expert Advisors, I test them, and I trade with them. As I trade with Expert Advisors, I create new ones and I test them. That’s an ongoing process. I’m quite happy to share these portfolio Expert Advisors with you.

In conclusion, I will show you how I create them and how I’m testing them in the next lectures.

Stay with me and you will learn a great system for algorithmic trading.