Why You Should Stop Trading The USD/JPY Pair In 2012

I stopped trading the USD/JPY last year because it was proving to be very difficult and the big price swings were becoming less and less frequent. Well the bad news is that it seems to have got even worse in 2012, and the USD/JPY pair looks as if it is on a life support machine at the moment.
For this reason I don't think anyone should be trading the USD/JPY pair at the moment. The price movements are just too small to make any real money from.
To demonstrate this point, just look at the weekly chart of the average true range (as indicated by the ATR indicator) of the USD/JPY pair since 2009.

You can see that the average weekly range was around 430 points just prior to 2009, and since then it has fallen lower and lower, and now stands at a pitiful 117 points. Remember this is not 117 points a day, this is 117 points a week!
Furthermore on a daily basis, the story is equally as bleak. The average daily trading range has often been in the 50-60 points region, and sometimes more, but it has dropped off sharply to what must be close to an all-time low of just 31 points. Day trading is hard at the best of times, but trying to squeeze out a decent profit when the USD/JPY pair only moves within a 31 point range every day is near on impossible.
So as I say, I really don't believe it is worth trading the USD/JPY pair at the moment. Unless the daily ATR indicator returns to 50 or 60 points, it is probably best to concentrate on the other major currency pairs instead, such as the GBP/USD and EUR/USD pairs for example.


Filed under Blog by JamesW
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Permalink• Print• Email• CommentRelated EntriesThe Current Trading Range Of The GBP/USD And EUR/USD PairsA Review Of The Forex Markets In 20113 Ways You Can Use The Average True Range (ATR) IndicatorThe Average True Range (ATR) Technical IndicatorThe Average Daily Range Of The Major Forex Currency Pairs2 Comments on »January 11, 2012FXRebates@ 7:36 pm:
I was already avoiding this pair in the end of 2011 and stopped trading it completely at the end of the year.
Permalink• Reply January 12, 2012frank page@ 3:02 am:
Hi James!
Happy New Year! The usd/jpy is just one of many pairs not suitable for trading right now. I monitor the 8 major currencies which gives me 28 currency pairs. Using my currency strength meter (as a filter) shows the the usd.jpy to be wkly +2, daily +3 right now. I will not trade any pair with a reading less than 8 (actually prefer +10!). So yes the usd.jpy is out for now. Tip: try eur/nzd (dly 14), nzd/chf, eur/aud (all above 10!. Trading as above is a very safe way to trade but requires some practise.