{"id":1608,"date":"2009-08-20T13:10:35","date_gmt":"2009-08-20T17:10:35","guid":{"rendered":"http:\/\/club.ino.com:80\/trading\/?p=1608"},"modified":"2009-08-20T15:24:46","modified_gmt":"2009-08-20T19:24:46","slug":"options-101","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2009\/08\/options-101\/","title":{"rendered":"More than Major Pairs"},"content":{"rendered":"

Shane got such a positive response to his first guest blog post (below) that I wanted to keep his momentum going and give him space to give you a little peak into his world of Forex trading. Many of you have checked out his \u201cEvil Genius Cheats<\/a>\u201d newsletter, but if you haven't I recommend you do so before he won't let any more free people in. Please enjoy the article, check out his \u201cEvil Genius Cheats<\/a>\u201d newsletter, and let the comments FLY!!<\/p>\n

=====================================================================<\/p>\n

Ask any trader what currencies they trade and 99% of them will mention the major pairs.\u00a0 The EURUSD, GBPUSD, USDJPY and a handful of others.\u00a0 These are very active, very liquid and perhaps out of habit, the most widely traded.<\/p>\n

What about the \u201cexotic\u201d pairs?\u00a0 The Danish Krone (USDDKK), Singapore Dollar (USDSGD) and a host of other pairs, give ample opportunity for the professional trader to make money.\u00a0 Right away, the main argument will be about the spread to trade exotics.\u00a0 True, the spread is much higher than EURUSD but look at the pip cost below while trading 100k.\u00a0 It is not the standard $10\/pip\/$100k.<\/p>\n

<\/p>\n

Here are some recent 14 period ATR numbers (Average True Range), pip value and spread:<\/p>\n

<\/p>\n\n\n\n\n\n\n\n\n
\n

PAIR<\/span><\/strong><\/p>\n<\/td>\n

\n

ATR<\/span><\/strong><\/p>\n<\/td>\n

\n

$\/PIP<\/span><\/strong><\/p>\n<\/td>\n

\n

SPREAD<\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

USD\/DKK<\/span><\/p>\n<\/td>\n

\n

520.69<\/span><\/p>\n<\/td>\n

\n

1.89<\/span><\/p>\n<\/td>\n

\n

40<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

USD\/SEK<\/span><\/p>\n<\/td>\n

\n

1355.31<\/span><\/p>\n<\/td>\n

\n

1.28<\/span><\/p>\n<\/td>\n

\n

100<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

USD\/SGD<\/span><\/p>\n<\/td>\n

\n

70.74<\/span><\/p>\n<\/td>\n

\n

6.89<\/span><\/p>\n<\/td>\n

\n

8<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

USD\/NOK<\/span><\/p>\n<\/td>\n

\n

885.22<\/span><\/p>\n<\/td>\n

\n

1.56<\/span><\/p>\n<\/td>\n

\n

75<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

* Based on Alpari. <\/span>One standard lot ($100000.00) $1000 margin<\/span><\/em><\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Are these markets I would day trade every day?\u00a0 Possibly, with more backtesting and using a higher timeframe to start.\u00a0 The \u201csecret\u201d for me at this time, for trading these pairs is to watch for the pairs to start a trend.\u00a0 How?\u00a0 Look for break-out of the range, bullish\/bearish chart patterns or a host of other methods to catch an impending move.\u00a0 Why?\u00a0 One look at the above numbers clearly show the massive potential in catching a multi day move on the majority of those pairs.\u00a0 Even the USDSGD with its smaller ATR, still rattles out a huge $6.89\/pip!\u00a0 The main reason these pairs move so much is simple\u2026thin volume.\u00a0 Add in news releases and the volatility can increase 10x as much as the standard major pairs.\u00a0 We can\u2019t also forget that those that do day trade these pairs, are generally looking for a quick jump and then they run for cover.<\/p>\n

Let\u2019s take a quick look at some extreme moves from the beginning of 2009 to July 09.<\/p>\n

\"\"
\nYou can clearly see, once the USDSEK took off, not only did it run for literally 1000\u2019s of pips but it gave ample opportunity for astute trades to get on the train.\u00a0 Obviously you would not catch the extreme of the move but for illustration purposes, let\u2019s look at some numbers:<\/p>\n

16518 pips x 1.28 = $21143.04 (Jan-Mar)
\n14629 pips x 1.28 = $18725.12 (Mar \u2013 Apr)
\n13826 pips x 1.28 = $17697.28\u00a0 (Apr \u2013 Jun)<\/p>\n

Let\u2019s look at the USDNOK<\/p>\n

\"\"<\/p>\n

Once again, when the trend occurs, it occurs with some push.\u00a0 For the better part of March 09, +10244 pips.\u00a0 From April 20 to the end of May, it was little subdued but 7308 pips at $1.56\/pip is a tidy sum of $11400.00<\/p>\n

Can you see the potential is adding an exotic to your trading basket?\u00a0 Will all of them perform?\u00a0 Probably not.\u00a0 Do all brokers offer up a nice selection?\u00a0 No.\u00a0 You won\u2019t find the Cruzeiro, Baht, Dirham or many others at every broker. Even those that do, are limited in the number of price points they get from their data suppliers.<\/p>\n

First thing you\u2019d want to do in deciding on a pair is see if your broker offers it.\u00a0 Second, bring up a daily chart and look at how the pair trades.\u00a0 You will see either nice swooping action or, like the USDHKD, extreme low volume sidways action with massive support just below the 7.7500 level.\u00a0 You will know good action when you see it.<\/p>\n

Are you put off about the spread?\u00a0 Don\u2019t be.\u00a0 While you may be used to seeing 1.2 \u2013 4 for the majors, keep in mind the cost of those pips AND how much those pair move.\u00a0 When you are looking at a 100 pip spread at an exotic, look at the cost per pip but also the average movement of that pair.\u00a0 Many times, you will see that those combined factors offset the psychological mishmash of a high spread.\u00a0 The spread cost can be wiped out quite quickly simply due to the volatility of the pairs.<\/p>\n

Fundamental junkies will no doubt not enjoy trading the exotics.\u00a0 Frankly, the airwaves are not blaring the latest news out of Singapore or some other far off land.\u00a0 Just know that when investors are not adverse to risk, the exotics are a good place to shop.\u00a0 The opposite is also true.\u00a0 When concern arises over the state of the economy or anything else that gives investors pause, look for a decrease in risk appetite and a move away from the exotics.\u00a0 That alone gives you opportunity elsewhere.<\/p>\n

The fx market is unlimited in potential.\u00a0 Don\u2019t limit yourself to the popular pairs especially when opportunity, and great opportunity at that, can be found in \u201cexotic\u201d locales.\u00a0 Your trader buddies may not have a clue what a \u201cSEK\u201d is, but your account balance sure will when you get on the right side of the move.<\/p>\n

By Shane Daly
\nNetPicks Coach for the High Velocity Market Master System<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Shane got such a positive response to his first guest blog post (below) that I wanted to keep his momentum going and give him space to give you a little peak into his world of Forex trading. Many of you have checked out his \u201cEvil Genius Cheats\u201d newsletter, but if you haven't I recommend you […]<\/p>\n","protected":false},"author":41,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[2327,2348,2347,2346,1829],"class_list":["post-1608","post","type-post","status-publish","format-standard","hentry","category-general","tag-forex-pairs","tag-high-velocity-market-master-system","tag-netpicks","tag-shane-daly","tag-trading-forex"],"yoast_head":"\nMore than Major Pairs - INO.com Trader's Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2009\/08\/options-101\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"More than Major Pairs - INO.com Trader's Blog\" \/>\n<meta property=\"og:description\" content=\"Shane got such a positive response to his first guest blog post (below) that I wanted to keep his momentum going and give him space to give you a little peak into his world of Forex trading. 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