Even if you have a couple of years of experience in the FOREX market, you should limit the number of currency pairs that you trade to just 1. Let me explain why I feel very strongly about this.

The currency market is not only the most dynamic market in the world, it is also the most complex. At $6.7 Trillion Dollars a day (as of 2020), the FOREX market dwarfs all other markets combined.

Of note is that to this post, I have a companion video of the same title that puts all of this together from a different view point.

If you've come from watching that video, then press on here. However, if this is your starting point, I might suggest that you read through this before watching the video. Or, if you want, you can skip to the bottom of this post to watch that video now.

That is complexity incarnate.....

But it doesn't have to be that way. You simply can't trade complexity, so why make it complex?

You don't have to. Here's one way that I resolve some of that complexity—

There are 3 major reasons why choosing just 1 currency pair to trade is the simpler path to financial success in the FOREX market:

• Each pair has different characteristics.
• Eliminates fragmenting your analytical focus.
• Enables ability to develop a more intuitive view.

And, it's exactly the same situation with currency pairs, and the individual countries making up those pairs.

The characteristics of the British economy and the American economy in the GBP/USD currency pair are quite different than not only the characteristics of the Australian economy and the New Zealand economy in the AUD/NZD currency pair, but AUD/USD presents quite a different scenario compared with GBP/USD even though both are USD based pairs.

Why bother with all of that? Let's say you're an American, and your grandparents both came from Switzerland. Why not then just trade USD/CHF (US Dollar/Swiss Franc)? You're familiar with the USD economy, and have an attachment, and interest in Switzerland, so why not become immersed in trading something like that, instead of, say, USD/JPY that you have perhaps little connection to or interest in Japan?

Wouldn't USD/CHF carry more interest for you to study? Sure it would.

If you're not interested in A, then your ability to focus on doing something productive with A becomes difficult. And if you try to include something that you are interested, say, B in with A, then you won't have much success trying to balance the two (or many) together into a viable working plan.

When trading financial instruments as complex and volatile as FOREX currency pairs, you better have a clear head.

You know you shouldn't trade if you're feeling sick. Your whole body system is fighting to make you better, and to try to trade with all that going on just fragments your attention. So, why would you want to trade the complexity of mixing analysis among 3 or 4 (or more) currency pairs?

Being able to sit down at the trading screen, and feel comfortable with the known characteristics of your chosen pair takes so much of the uncertainty out of your approach to the trading day, and the analysis you need to accomplish successfully if you're going to cash at the end of the day.

If you haven't experienced this more mentally relaxed state in your trading, and wonder why trading multiple pairs could fragment your decision process, try attending any 'committee' meeting where some decision has to be made....

We head to the gym after work to throw some hoops with friends, and feel comfortable that your performance fits right in with the group. That's your intuition working for you.

Or, you sit down to play chess with your brother, and just know that you're going to get your ass handed to you by the 12th move. That's your intuition working for you.

Or.... Yup, that'll be your intuition working for you as well.

Where does this intuition come from?

Intuition comes from your accumulated experiences with whatever activity it is that you're involved in.

The more experience you have, the more your intuition is able to influence your decision process.

In trading, that intuitive view of the market at any particular time is only possible if you have been able to focus clearly on a small number of variables over a long enough period of time for the characteristics of the pair you are trading to just sort of come effortlessly to you.

Intuition enables you to project your accumulated experience into an anticipatory view of what the market is most likely to do in the near future.

Does it always work? Of course not, and 'work' is a deadly term to focus on....

When the intuitive speculation that you have 'works': what exactly does that mean?

Does it mean that your intuition 'worked'? Does it mean that your interpretation of the intuitive view of the market 'worked'? Does it mean that the market behaved in such an anticipated manner that your actions 'worked'?

No, no, and... no.

There's far more psychology involved here than a simple trading blog post should be getting involved in.

And we really don't have to.

We don't have to understand the mysteries of a car's carburation, or its engine static compression ratio in order to drive to the grocery store.

And we don't have to understand how intuition comes from accumulated experience to know that intuition plays an integral part of our lives. Intuition is a gift, but — like everything else in life — you have to do the work necessary to obtain its benefits.

Video: The Case For Trading Only 1 FOREX Currency Pair