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.


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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.

Weekly Trading Update - 24-28 October 2011

Well it's been an excellent week for me this week. However that's nothing to do with my forex trading. It's mainly because the stock market has rallied and my stock portfolio is now in much better shape. I have banked some nice profits in the likes of BP and Rio Tinto, but I'm still holding several stocks for the long term, including Tomco Energy, which is still doing very nicely.

On the forex front, it has been more frustrating. There were excellent opportunities to go long on the GBP/USD and EUR/USD pairs using my main 4 hour trading system (see right for more details). However both the upward EMA crossovers took place in the overnight trading session (when the Eurozone bailout plan was announced), so I was unable to trade them.

My breakout system didn't help generate any profits either. There was a breakout today that I missed because I was getting my breakfast (although it has moved no more than 10 points into profit so far), and the one trade I did place resulted in a 20 point loss.

I'm starting to think it's time to reassess my trading strategies and maybe go through my vast collection of trading strategies to try and find something different. I don't seem to be making anywhere near as much money as I used to, and I'm not really enjoying trading the forex markets as a result.

In fact I much prefer trading and investing in stocks, and always have done. So maybe that's where my future lies.

Anyway I'll speak to you again next week. Have a great weekend.

 

 

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Permalink• Print• Email• CommentRelated EntriesWeekly Trading Update - 17-21 October 2011Wall Street Survivor GameThe Major Differences Between Forex Trading And Share TradingStock Trading Nitty Gritty ReviewWeekly Trading Update - 31 October - 04 November 20112 Comments on »October 28, 2011Trevor@ 2:05 pm:

Certainly forex charts have been flat the past couple of weeks, and Swiss crosses remain off the radar owing to government controls.

Fixed-odds trading with Bet on Markets is an alternative to spread betting. Tip: the variable percentages offered reflect the chance of winning (at lesser odds).

As a share/stock trader have you used this software?

http://www.sharescope.co.uk/

£18 a month for the basic end-of-day service is not bad. Just use IG Index's advanced charts which are free if minimal trades are placed monthly.

Permalink• Reply October 29, 2011James Woolley@ 8:56 pm:

Hi Trevor,

I don't use Sharescope myself but I know a lot of very good traders on ADVFN who use Sharescope Gold, which I think is the £18/month service.

I use the ProScreener on IG's advanced charts for technical analysis alerts and Digital Look for screening stocks based on fundamentals.

Both are free and more than enough for my needs. I would probably subscribe to Sharescope if I traded small and mid-cap stocks, but I mainly stick to FTSE 100 stocks these days.

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Recent PostsMy Most Popular Posts Of 2011 A Review Of The Forex Markets In 2011 How To Predict 5 Day Trends (With Updated Performance Results) IG Index Reduces Spreads On Forex Pairs Are The Signal Providers On ZuluTrade About To Become A Lot More Profitable? Stay UpdatedRSS FeedHelpPopular LinksADVFN ReviewBest Forex Trading SignalsCashBackForex ReviewCollective2 ReviewCurrency Trading For Dummies ReviewFAP Turbo ReviewForex Avenger ReviewForex BrokersForex Candlesticks Made Easy ReviewForex CourseForex Currency TradingForex EducationForex Income Engine Trade Alert Software ReviewForex Morning Trade ReviewForex Nitty Gritty ReviewForex Power Group ReviewForex Profit Accelerator Trade Alert Software ReviewForex Profit Multiplier ReviewForex SystemsForex Trading Machine ReviewForex Trading Made EZ ReviewForex Trading ServicesMarketclub ReviewPortfolio Prophet ReviewStock Market InvestorStocks And OptionsStock Trading Nitty Gritty ReviewSurefire Trading Challenge ReviewTradefair ReviewTradeKing ReviewZecco ReviewZuluTrade ReviewCategoriesBlogArchivesDecember 2011November 2011October 2011September 2011August 2011July 2011June 2011May 2011April 2011March 2011February 2011January 2011December 2010November 2010October 2010September 2010July 2010June 2010May 2010April 2010March 2010February 2010January 2010December 2009November 2009October 2009September 2009August 2009July 2009June 2009May 2009April 2009March 2009February 2009January 2009December 2008November 2008October 2008September 2008August 2008July 2008June 2008May 2008April 2008March 2008February 2008January 2008November 2007October 2007Disclaimer

The information contained on this website should be used for educational purposes only and does not constitute financial advice.

Forex trading carries a substantial risk and may not be suitable for everyone. If using leverage, you can lose more than your initial deposit.

Earnings Disclosure

The author of this website may have an affiliate relationship with certain companies, and may receive a commission for linking to certain products that subsequently result in a sale.

Trading Stocks Instead Of Forex: FTSE 100 Or AIM?

In my last post, I talked about how I was thinking my future lay in share trading rather than forex trading. Well after writing this post, I was kindly sent a guest post from Nicholas Pascal that discusses stock trading in some detail, and highlights the differences between trading FTSE 100 stocks and AIM stocks. I hope you find it useful.

I think it’s important to first point out that there isn’t much of a close correlation between market movements in stocks and forex. An artificial connection between the two has been forged since the early 1970s, which saw the end of the era of fixed exchange rates and brought with it a new breed of trader making connections between stock price and currency market behavior. Nevertheless, this makes it harder to apply an indicator.

On the other hand, there is more of a socio-economic link between forex and stocks . When there is a booming economy, the market is flooded with foreign investors buying stock, which brings with it a high volume of foreign currency which is good news for the market of that particular nation.

In this post, I want to discuss the pros and cons of trading stocks on the FTSE 100 Index versus the Alternative Investment Market (AIM).

FTSE 100: PROS & CONS

PROS:

- Well established, successful corporates with stable projections and high burden of reporting requirements = generally lower investment risk.

- No minimum investment required.

- Offers good long-term growth.

CONS:

- High volume of trading means that the index can easily move 100+ points in a day, which could result in high losses for spread betters with a small pool of trading funds.

- General risk exposure to lose more money than staked if spread betting.

AIM: PROS & CONS

PROS:

- Suited to the experienced investor who is comfortable with a high risk / high returns strategy of investing in smaller businesses.

- Wide array of listed companies; AIM attracts a high number of diverse international corporates.

CONS:

- Lower trading volume due to the majority of investors in AIM being institutional investors.

- 'Fast track' listing, less stringent regulatory and reporting requirements for companies = possibility for greater investment risk to non-institutional investors.

- Decreased transparency as to the financial health of companies listed gives a lesser indication of their true profitability.

Bio:
 
Nicholas Pascal is the in-house copywriter with Everest Forex and has been trading currencies since he was a teenager. He has freelanced and been a consultant for a number of firms specializing in forex, and encourages the uninitiated to get involved in this democratic and empowering market.

 

 

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Recent PostsMy Most Popular Posts Of 2011 A Review Of The Forex Markets In 2011 How To Predict 5 Day Trends (With Updated Performance Results) IG Index Reduces Spreads On Forex Pairs Are The Signal Providers On ZuluTrade About To Become A Lot More Profitable? Stay UpdatedRSS FeedHelpPopular LinksADVFN ReviewBest Forex Trading SignalsCashBackForex ReviewCollective2 ReviewCurrency Trading For Dummies ReviewFAP Turbo ReviewForex Avenger ReviewForex BrokersForex Candlesticks Made Easy ReviewForex CourseForex Currency TradingForex EducationForex Income Engine Trade Alert Software ReviewForex Morning Trade ReviewForex Nitty Gritty ReviewForex Power Group ReviewForex Profit Accelerator Trade Alert Software ReviewForex Profit Multiplier ReviewForex SystemsForex Trading Machine ReviewForex Trading Made EZ ReviewForex Trading ServicesMarketclub ReviewPortfolio Prophet ReviewStock Market InvestorStocks And OptionsStock Trading Nitty Gritty ReviewSurefire Trading Challenge ReviewTradefair ReviewTradeKing ReviewZecco ReviewZuluTrade ReviewCategoriesBlogArchivesDecember 2011November 2011October 2011September 2011August 2011July 2011June 2011May 2011April 2011March 2011February 2011January 2011December 2010November 2010October 2010September 2010July 2010June 2010May 2010April 2010March 2010February 2010January 2010December 2009November 2009October 2009September 2009August 2009July 2009June 2009May 2009April 2009March 2009February 2009January 2009December 2008November 2008October 2008September 2008August 2008July 2008June 2008May 2008April 2008March 2008February 2008January 2008November 2007October 2007Disclaimer

The information contained on this website should be used for educational purposes only and does not constitute financial advice.

Forex trading carries a substantial risk and may not be suitable for everyone. If using leverage, you can lose more than your initial deposit.

Earnings Disclosure

The author of this website may have an affiliate relationship with certain companies, and may receive a commission for linking to certain products that subsequently result in a sale.

Weekly Trading Update - 31 October - 04 November 2011

There were no trades for me this week. Regarding my 4 hour trading system (see right for more details), there were no decent set-ups on any of the major pairs, and I haven't used my early morning breakout system this week because to be honest I have preferred to watch the share price movements of Tomco Energy instead.

This is the only small cap stock in my portfolio and it has continued to soar higher this week, despite a little bit of selling today after the latest RNS. I have already decided that if this stock gets to 10p in the next few years (which I'm sure it will), I will probably give up forex trading and put this blog into retirement because I will have more than enough to live on. If it goes beyond that or gets taken out at a higher price, then I definitely will.

Forex trading is proving to be very tough right now with all the uncertainty surrounding the Eurozone, and I am finding very few decent set-ups as a result. In fact I'm seriously considering not trading any more this year whilst there is so much uncertainty around.

 

 

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Permalink• Print• Email• CommentRelated EntriesWeekly Trading Update - 17-21 October 2011Weekly Trading Update - 24-28 October 2011A Review Of The Forex Markets In 2011Weekly Trading Update - 07-11 November 2011Stock Trading Nitty Gritty Review2 Comments on »November 6, 2011Managed Forex Accounts@ 6:38 pm:

Great post! I like your blog.

Permalink• Reply November 7, 2011Leah Tsang@ 9:13 pm:

Hi James,

It seems your stock TOM is doing really well. I watched it a few times and it's gone up a lot. I hope you don't retire your site because I really like to follow it. Your tips for a beginner forex trader is very helpful. You are right that the current market is very difficult to trade. I have just been observing lately with no trades.

Take care.
Leah

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ZuluTrade

Free automated trading service that allows you to trade the signals of over 1200 different signal providers. Once you've chosen your providers, the signals are then executed automatically in your account. Free demo accounts are available for testing purposes.

Click here to find out more.

Recent PostsMy Most Popular Posts Of 2011 A Review Of The Forex Markets In 2011 How To Predict 5 Day Trends (With Updated Performance Results) IG Index Reduces Spreads On Forex Pairs Are The Signal Providers On ZuluTrade About To Become A Lot More Profitable? Stay UpdatedRSS FeedHelpPopular LinksADVFN ReviewBest Forex Trading SignalsCashBackForex ReviewCollective2 ReviewCurrency Trading For Dummies ReviewFAP Turbo ReviewForex Avenger ReviewForex BrokersForex Candlesticks Made Easy ReviewForex CourseForex Currency TradingForex EducationForex Income Engine Trade Alert Software ReviewForex Morning Trade ReviewForex Nitty Gritty ReviewForex Power Group ReviewForex Profit Accelerator Trade Alert Software ReviewForex Profit Multiplier ReviewForex SystemsForex Trading Machine ReviewForex Trading Made EZ ReviewForex Trading ServicesMarketclub ReviewPortfolio Prophet ReviewStock Market InvestorStocks And OptionsStock Trading Nitty Gritty ReviewSurefire Trading Challenge ReviewTradefair ReviewTradeKing ReviewZecco ReviewZuluTrade ReviewCategoriesBlogArchivesDecember 2011November 2011October 2011September 2011August 2011July 2011June 2011May 2011April 2011March 2011February 2011January 2011December 2010November 2010October 2010September 2010July 2010June 2010May 2010April 2010March 2010February 2010January 2010December 2009November 2009October 2009September 2009August 2009July 2009June 2009May 2009April 2009March 2009February 2009January 2009December 2008November 2008October 2008September 2008August 2008July 2008June 2008May 2008April 2008March 2008February 2008January 2008November 2007October 2007Disclaimer

The information contained on this website should be used for educational purposes only and does not constitute financial advice.

Forex trading carries a substantial risk and may not be suitable for everyone. If using leverage, you can lose more than your initial deposit.

Earnings Disclosure

The author of this website may have an affiliate relationship with certain companies, and may receive a commission for linking to certain products that subsequently result in a sale.

My Experiences Of Trading Forex And Stocks Using Long Term Charts

To some extent trading the forex markets using long term charts (such as the daily and weekly charts) is a lot easier than trading the short term charts (such as the 1 and 5 minute charts). Indeed that's why my core trading system, ie my main 4 hour trading system (see right for more details), is based on the 4 hour and daily charts.

However when you are comparing long term forex trading to long term share trading, there is only one winner for me - share trading.
 
There is one thing you have in your favour when trading good quality stocks, and that's the fact that the share price should continue heading higher as long as the company is growing it's earnings every year (and ideally it's dividends as well).
 
So all you have to do is find those stocks that have shown consistent earnings growth over many years (and are likely to continue growing in future years) and buy the actual stocks or open long positions when the opportunities arise, ie when they are oversold on a technical basis or massively undervalued on a fundamental basis.
 
In other words whenever the share price falls with the wider market, you should view this an opportunity to scale into long positions, safe in the knowledge that you are trading a solid long term growth company and the long term trend should prevail at some stage.
 
When you are trading forex pairs on the other hand, you can't really get a firm idea of the underlying long term trend. For example no-one knows if the GBP/USD or EUR/USD pairs will continue heading higher or lower in the coming years.
 
So in effect you are trading blind to some extent. There are rare occasions when the fundamentals can give you a better idea of any possible long term trends, but unless you are a skilled economist who is prepared to look at lots of economic data from various countries, it is very hard to do.
 
In most cases all you have to go on are technical indicators, whereas you have technical indicators and financial forecasts and predictions to help you when trading stocks.
 
Finally with share trading you can afford to take a long term view if you buy the actual stock, and not panic too much if the price moves against you initially. You can sell your position or take a loss whenever you want, however with forex trading it is not so easy to take a long term view because your position may well be leveraged. Therefore you may be forced to close out positions if the price moves against you and you start to incur big losses.
 
Saying all that, I still believe there are decent profits to be made from long term forex trading, and I certainly don't want to put anyone off because technical analysis works really well on these long term charts. The indicators themselves are more reliable and things like fibonacci levels and lines of support and resistance take on greater significance.
 
However I just think long term share trading is slightly easier to make consistent profits if you only trade high quality growth stocks because you already know the long term trend. Therefore you can trade in and out of positions accordingly.
 
Ultimately it is up to you to decide what style of trading is best for you, and what type of instrument you want to trade. If you are like a lot of traders, you probably won't want to trade any long term charts whatsoever. However I just thought I would write this article comparing long term forex trading to long term share trading because some people prefer this more relaxed style of trading.

 

 

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Copyright 2012Privacy Policy|Terms Of Service|About|ContactAutomated Forex Signals:

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Free automated trading service that allows you to trade the signals of over 1200 different signal providers. Once you've chosen your providers, the signals are then executed automatically in your account. Free demo accounts are available for testing purposes.

Click here to find out more.

Recent PostsMy Most Popular Posts Of 2011 A Review Of The Forex Markets In 2011 How To Predict 5 Day Trends (With Updated Performance Results) IG Index Reduces Spreads On Forex Pairs Are The Signal Providers On ZuluTrade About To Become A Lot More Profitable? Stay UpdatedRSS FeedHelpPopular LinksADVFN ReviewBest Forex Trading SignalsCashBackForex ReviewCollective2 ReviewCurrency Trading For Dummies ReviewFAP Turbo ReviewForex Avenger ReviewForex BrokersForex Candlesticks Made Easy ReviewForex CourseForex Currency TradingForex EducationForex Income Engine Trade Alert Software ReviewForex Morning Trade ReviewForex Nitty Gritty ReviewForex Power Group ReviewForex Profit Accelerator Trade Alert Software ReviewForex Profit Multiplier ReviewForex SystemsForex Trading Machine ReviewForex Trading Made EZ ReviewForex Trading ServicesMarketclub ReviewPortfolio Prophet ReviewStock Market InvestorStocks And OptionsStock Trading Nitty Gritty ReviewSurefire Trading Challenge ReviewTradefair ReviewTradeKing ReviewZecco ReviewZuluTrade ReviewCategoriesBlogArchivesDecember 2011November 2011October 2011September 2011August 2011July 2011June 2011May 2011April 2011March 2011February 2011January 2011December 2010November 2010October 2010September 2010July 2010June 2010May 2010April 2010March 2010February 2010January 2010December 2009November 2009October 2009September 2009August 2009July 2009June 2009May 2009April 2009March 2009February 2009January 2009December 2008November 2008October 2008September 2008August 2008July 2008June 2008May 2008April 2008March 2008February 2008January 2008November 2007October 2007Disclaimer

The information contained on this website should be used for educational purposes only and does not constitute financial advice.

Forex trading carries a substantial risk and may not be suitable for everyone. If using leverage, you can lose more than your initial deposit.

Earnings Disclosure

The author of this website may have an affiliate relationship with certain companies, and may receive a commission for linking to certain products that subsequently result in a sale.