Play the Strongest Vs Weakest Part 2



From the last article,assume that Ali is EUR, JPY is Joe and USD is yours truly. So, now the first bout translates to EURJPY and the second bout translates to EURUSD. For the past 2-3 weeks, we have seen that the euro has been strengthening, Instead of blindly going long on some pair based on its strength, you needed to spend 5-10 mins to find the best pair to go long. So,now, you have decided to go long on EUR. Choose the pair which pairs the Euro against the weakest. Surely, JPY is not the weakest. How do we know that. We can know this by seeing that it is gaining against USD. Now we know that USD is weaker. Now, we see whether USD is gaining against any other currency. We continue doing this till we find a currency which is not gaining against any others. Now, we see that USD is not gaining against any currency. So, we come to the conclusion that it is best to play the strongest, Euro, against the weakest, the USD. True to this, we can see that EURUSD has gained 600 pips in 2-3 weeks while no other pair has gained that much.

I could see that there were a lot of people who tried going long on GBPUSD, EURJPY etc. but all that you needed to do was go long on EURUSD. This guarantees good returns and the risks were also very low. If you had more money to invest, take more lots on EURUSD rather than going long on other pairs just because one of it was strong. In the boxing example, we knew Ali was strongest but we had to pick the bout which pitted the strongest against the weakeast.Lesser risk,lesser nail-biting,lesser tension, higher returns. So remember to always pit the strongest against the weakest.

In the next article, i will explain how i predicted (in my twitter feed) 3 weeks ago that EURUSD would go till 1.4050 before a deep correction.

Do follow me on twitter (http://twitter.com/ns_karthik ) where i post some of my trades in real time.

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  • agreed, fred…whether the volatility of the pair is agreeable to you fits in your MM strategy…i had assumed that traders would be aware of that…

  • thanks Fontu…

  • fred

    This is a good idea as a strategy however it is not without potential pitfalls. While doing this has the largest potential gain, it may also be the most volatile pair. So it may not be appropriate for strategies that used tight stop losses and/or small time frames.

  • Fontu

    Very nice teaching , though tried this strong & weak currency pairs but not so confident or continue confidently. thanks Karthik .great ! fontu

  • thanks , mate !!

  • PipMaxzz

    Great article. Looking for the next article. KEep up the good work Karthik!

  • for me, it is just a matter of a quick look at the news and the market as a whole…hence does not take me a long time…and sorry, i dont know of any software which does that…

  • Bernbeach

    Very good. I do this but it takes a lot of time daily to find out which currency is strongest and which one weakest… Can you recommand a software who does this automatically for all the currency pairs?

  • yes Danny…thats right….thats how u determine the weak and strong…thanks for ur encouraging message…

  • thanks Pat..

  • Thanks Vikram…

  • Vikram

    Nice article Karthik. Lots to learn from you.

  • Patricio A

    Another great article my friend, god god god,!!! Thanks for sharing 🙂

  • Danny C

    AaHah, thats how its done. Thanks Casey, great post. You say it takes 5-10 mins. to find the weakest and strongest. How far back in time is a good measurement to find the weakest vs strongest, you mention 2-3 weeks. I’m thinking the shorter you go back for short term trades and the longer you back for longer term trades?? Keep up the great work!! I’ve sat in on your live trading rooms and I have learned something new from you, Michael, Tim, and Sophia everytime I get to attend!!