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What's the take on this? Normally I trade gold, XAUUSD. I'm a beginner, so I'm pretty bad at this, but I notice that EUR/JPY right now is in a creeping uptrend on the daily that looks like it could go on forever (probably due to carry trade and dollar weakness, not sure). Does it make more sense each day to stick to the best/most trending pairs only or always trade the one pair every day for consistency?
Hi William,
A key constraint in forex, especially for intraday trades, is the spread. For example, if you’re scalping for 10 pips and the round-trip spread is 2 pips, 20% of your potential profit is lost to transaction costs. That’s difficult to overcome without an outstanding profit ratio.
In contrast, if you're trading from the hourly chart or higher timeframes and targeting +30 pip moves, the impact of spread becomes much less significant. So yes, in trending conditions like the one you mentioned, a trending asset can offer a better edge, but if the spread is relatively high and intraday moves don’t offer acceptable profit margins, shifting to a higher timeframe is often the better option.
Best regards, Josep
