Cents Zero

Summary8

2011-03-11T04:40:00.001-08:00

Summary
This concludes Part Two of Getting Started in FOREX Trading Strategies. You
have now assembled a toolbox, defined at least your initial trading style, and
decided your money management parameters. You’ve selected and explored a
broker/dealer’s trading station with a demo account and perhaps worked with
some of the choices residing in your codex. Finally, you’ve done the initial setup
on your trade station with charts, stop-loss parameters, and any of the other
codex tools the platform offers.
You do know the trading platform inside and out and are extremely
comfortable with using it. You don’t know how to put all of this together as
yet, but you are already ahead of 90 percent of all traders with respect to trade
preparation.

Overkill0

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Overkill
The key to success is spending most of your trading time analyzing a few markets
very thoroughly and minimizing distractions that force you to change focus
too often. Keep it simple.

FIGURE 8.4 Charting Services.
FXtrek (www.FXtrek.com), maker of IntelliCharts, has a superior charting
service. It is integrated or can be integrated into some broker/dealer
trading platforms.
Source: FXtrek IntelliChart™. Copyright 2001–2007 FXtrek.com, Inc.

I have seen trade stations for individual traders with up to fifteen monitors!
That is overkill. I simply don’t think an inexperienced trader can follow so
many markets, charts and indicators—and make a rational decision about a
trade. Frequently shifting from one market to another is not good. Two monitors
should do; one for your broker-dealer platform, another for charts and indicators.
You may wish to keep your primary markets on the monitor with
your trading platform. Use the second monitor to host charts of your secondary
and tertiary markets. If you do need ultra-high power and multiple
monitors, check out: www.alienware.com and www.tradingcomputers.com.
Do not forget a backup power supply and a backup internet connection.
Tip—do not skimp on either the quality of your monitor(s) or graphics
card. When you get rich from trading and retire to Hawaii you will want to
save your eyesight for the sunsets.

Setting Up Your Trading Platform

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Setting Up Your Trading Platform
The two most critical features you will need to trade the codex approach are
bar charts and flexible stop capabilities. If you can trade from the chart, that
will be a small but significant advantage. Some of the newer dealer platforms
118 DEVELOPING A TRADING CODEX
FIGURE 8.3 The Account Due Diligence Process.

allow you to simply click on the chart to execute a trade, rather than manually
enter a price.
One feature I miss is being able to set the range values on charts; these are
automatically set for the trader when the trader selects the time scale.
If and when you trade multiple markets, you will probably want a computer
system with two separate monitors. You can, of course, keep multiple browser sessions
open, but clicking from one to another can be distracting. One of the monitors
will be for your actual trading activities, the other(s) for your charts.
For trading the codex method, you need three bar charts for each pair or
cross you are trading. How you organize charts is up to you. Experiment as
much as you like, but be fully satisfied with the arrangement before trading.
After you’ve selected a broker/dealer and a trading platform, it is time
to set it up for trading. Having spent some time with the broker/dealer’s
demo account, you should be comfortable with the methods for doing a simple
setup. The key elements are your charts. You’ll want full visual reference
to your three bar charts according to your trader profile for the USD/EUR. If
you have space, add the primary (middle chart time frame) of three other
pairs (not crosses) that appear to meet your personal codex criteria.
The author had hoped to show the reader a typical trading platform
setup. We asked permission from five different broker-dealers: Gain Capital,
EFXgroup, DukasCopy, FXsol, and HotSpotFX. Gain Capital was kind
enough to reply and was anxious to oblige, but because of third-party charts
was unable to oblige. The others did not respond to our request.
I recommend the serious FOREX trader have at least a 20-inch widescreen
monitor with a high-end graphics card. Many traders use multiple monitors;
I’ve seen systems with a dozen monitors. I use two monitors—one for my
dealing station and one for my charts. You can manage everything on one
monitor but the constant opening, closing, and resizing of windows can be distracting
and time-consuming.
Initially you will find following three charts for a single pair to be a full
time job. As you gain experience you will become more comfortable watching
multiple markets. Everyone has a limit, in psychology it is called ‘channel
capacity’ and your trading method also impacts how many markets you can
track comfortably. My limit seems to be five or six and I am very comfortable
with three or four.

Demo Account zero

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Demo Account
If you are a new FOREX trader, you should download the demo of at least four
or five broker/dealers and spend a few hours working with each of them.
The second criterion is the feature set. Does the trading platform have
the tool set you need and the money management capabilities? Appendix B

FIGURE 8.1 Sample Chart 1: A 10-Minute, 1-Day Chart.
Colors, chart size, and time frame can all create a different look and feel.
Experiment with a variety of trading stations and find the ones that seem
best to you. Then stick with them.
Source: FXtrek IntelliChart™. Copyright 2001–2007 FXtrek.com, Inc.

FIGURE 8.2 Sample Chart 2: A 10-Minute, 5-Day Chart.
Shading, color (if you use other than black and white) and sizes can alter
the appearance of a chart dramatically.
Source: FXtrek IntelliChart™. Copyright 2001–2007 FXtrek.com, Inc.

contains a list of broker/dealers meeting codex requirements with respect to
feature set. None of them have everything, however. As I have mentioned,
swing charts are not popular right now and are more difficult to find.
All retail broker/dealers offer a demo account. (See Figure 8.3.) Try at
least five of them, more if possible.
Be sure a trading platform has as many as possible of the tools you need
and use. You can find almost anything from third-party vendors, but the more
your primary platform includes, the better and easier it is for the trader. Just a
few of the more popular:

efxgroup.com

oanda.com

gftFOREX.com

hotspotfx.com

gaincapital.com
Most brokers ask for only the basic information to open a demo account.

FIGURE 8.3 The Account Due Diligence Process.

Be sure a trading platform has as many as possible of the tools you need
and use. You can find almost anything from third-party vendors, but the more
your primary platform includes, the better and easier it is for the trader. Just a
few of the more popular:
www.gaincapital.com
www.efxgroup.com
www.FOREX.com
www.gftFOREX.com
www.hotspotfx.com
Most brokers ask for only the most basic information for a Demo
account but you will be on their mailing list.

Selecting a Broker/Dealer

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Selecting a Broker/Dealer
Selecting a broker/dealer is discussed in detail in Getting Started in Currency
Trading (GSICT). Since that book was written, we can all be grateful for a
number of happy occurrences. Many of the borderline broker/dealers are gone.
New capital requirement rules have taken effect, and all the major trading platforms
have become both more stable and more robust. In fact, so many features
exist in a typical dealing station that it sometimes becomes confusing.
Most of the major broker/dealers also have arrangements with third-party
vendors, which allows you a great deal of flexibility in selecting a toolbox.
However, I recommend starting with just the charting tools integrated into
your broker/dealer’s trading platform.
Your primary interest is in broker/dealers’ bar charts, because these are
the backbone of the codex trading approach.
The first criteria (beyond the due diligence covered in Chapter 5 of GSICT) are the look and feel. How do the charts look to you? What about the
overall feel of the platform? This is strictly a personal choice. Select a market
pair and a specific time range and time frame. Look at and work with this chart
from several broker/dealers. Remember that most trade stations allow you to
customize the look and feel of a chart.
You’ll be watching the screen for many hours, so make a good initial
choice and try to stick with it. Just changing chart color schemes midcourse
can be an enormous distraction. Spend some time here and try to stick with
your selections. Figures 8.1 and 8.2 will give you an idea how different parameters
can make charts look much different.

Setting Up Your Trading Platform You’ll make most of your money sitting on your hands.

2011-03-11T04:20:00.000-08:00

Setting Up Your Trading
Platform
You’ll make most of your money sitting on your hands.

In the codex approach to FOREX trading, all the elements must work together
in harmony. This includes the broker/dealer trading platform, sometimes
referred to as a trading station

Summary

2011-02-18T03:29:00.001-08:00

Summary
From the information in this chapter, you should determine your trader profile
and complementary money market parameters, including trade size and stoploss
values. Add all this information to your codex notebook along with the
trading techniques you have selected for your personal codex.

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Monitoring a Trade

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Monitoring a Trade
Between entry and exit, there is not too much the trader can or should do beyond
keeping the trade closely under observation. You’ve made your decisions,

DEVELOPING A TRADING CODEX

paid your money—now it’s time to watch. Use this time to examine other candidate
trades or update your reports. Don’t use it to troll the blogs or forums.
There are reasons you may be advised to close an active position before it
either attains your profit objective or hits your stop-loss:
Reasons to Close an Active Trade
• An unexpected announcement is pending.
• The market environment changes suddenly.
• You are called away for a period of time from the markets.
• Your Internet or trading platform goes down.
• You suffer an emotional crisis.
Processes work best the less they are interrupted or altered. If you find
yourself frequently closing an active trade, it may be time to reexamine the
process itself.

Market Entry and Exit0

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Market Entry and Exit
The methods for market entry are numerous. Some traders use charts to enter
and exit a trade, some traders use ad hoc rule sets, and others use indicators.

Entry and exit off a chart is the most transparent; you don’t have to translate
the meaning of one tool to another to make a decision. It is also faster, and the
markets move so quickly that whoever hesitates is indeed lost.
Exit is a little different from entry. You make an independent decision to
enter a market. Exit decisions may be due to your profit target being attained
and/or the market hitting your stop-loss. Those new to FOREX should set a
stop-loss order for their fixed loss amount as soon as they have confirmation of
a market entry. See Figure 7.1.
My FxCodex approach uses the entry and exit techniques inherent in
Getting Started in Currency Trading, namely GSCS. I show you more of these in
Part Three. In Chapter 8, I discuss using GSCS to both enter and exit the market.
For now, use it only to enter, and add the exit techniques later, after you
have had a few months’ experience trading.
I believe any codex approach should use the chart entry and exit method,
if not with GSCS, then with some other internalized technique, even if it is a
fixed price method.

Breaking Even

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Breaking Even
It may sound strange to hear that your overall goal is to break even. However,
especially for the new trader, that is exactly how it should be. We know most

DEVELOPING A TRADING CODEX

new traders lose quickly and are shown the door long before they even have the
time to develop their trading style or learn to use their trading tools. The best
way to avoid this calamity—and be around to learn the markets and profit
thereby—is to think about risk first, reward second.
Breaking even does not mean closing a trade after only a few minutes, although
I have done that exact thing many times when I felt something was
wrong or the market environment changed rapidly. As long as you don’t overtrade,
the costs of doing business in FOREX are small enough that the trader
can afford such luxuries. If you start with the USD/EUR pair, you will pay only
two or three pips per trade.
Statistically, you have a higher overall winning expectation with ten 10-pip
loss trades than a single 100-pip loss. A 100-pip trade is a calamity to most
traders; 10 pips is very survivable.
Breaking even does require giving most of your pretrade consideration to
the risk involved in a trade. If a trade doesn’t fit into your profile parameters,
you had better make sure you have very substantial reasons for going off-board.

Trade Size
In Chapter 6, I discussed briefly setting a trade size and sticking with it. Each
time you double your money—should you be so fortunate—you may then
double your trade size.
If you’re on a beer budget of $2,000 or less, you’ll need to begin trading
with what is called a mini-account. Most broker/dealers now offer miniaccounts.
OANDA (www.oanda.com) and www.efxgroup.com are two you
might consider; there are many more. You can work backward from your trader
profile and money management parameters to determine a reasonable trade size
based on the 10 · 3 trading campaign concept I introduced in Chapter 6.
Again, I recommend that newbies use a fixed-loss amount for each trade.
The trade size calculation is:

All other money management parameters can be derived from this formula
and your trading profile.

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Unrealistic Expectations

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Unrealistic Expectations
The guerilla profile on small trade capital is not recommended. Retail pip
spreads, an occasional reversal, ballooning pip spreads on news, and inability to
execute instantly are all reasons leading to failure.
The position profile on small capital is not recommended. The risk for
the small trader staying over sessions is very high.
You can’t have it all: Don’t expect to both hit a high percentage of winning
trades (50 percent or more) and also use very close stops (10 pips) and/or
high-ratio risk/reward parameters (5:1 or more).
As you adopt new market pairs and crosses to trade, you will find with experience
that some markets do require money management parameter adjustments.
However, if a pair takes you out of your trading profile, perhaps it is
better to seek another opportunity.
I talk about using this information in Parts 3 and 4. For now, we are
happy to just add the basics to your codex.

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Matching Profiles with Parameters

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Matching Profiles with Parameters
Now consider these three parameters in conjunction with your profile.
Guerillas: 10 · 3 trades per campaign, 15-pip objectives, and 10-pip stops.
Scalpers: 10 · 3 trades per campaign, 25-pip objectives, and 15-pip stops.
Day traders: 10 · 3 trades per campaign, 50-pip objectives, and 20-pip stops.
Position traders: 10 · 3 campaigns, 1-pip objectives, and 25-pip stops.
The longer term your trader profile allows, the lower can be your overall
win-to-loss ratio.
Feel free to alter these parameters, at least slightly. But don’t go offboard—
that is, outside of them—too often without good reason.

zero cents

Money Management Parameters

2011-02-18T03:22:00.000-08:00

Money Management Parameters
As I wrote in Getting Started in Currency Trading, there are three basic money
management parameters to be considered. Although they are important individually,
it is critical that they work together and aren’t contradictory with each
other or with your trader profile.
1. Trading capital.
2. Trade size.
3. Risk/reward (stop/profit objective).

Making Money Management Decisions

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These should all work in harmony with your trading profile. For example:
• Don’t position-trade if your trading capital is $500.
• Don’t trade 100,000 lots with $1,000 trading capital.
• If you are a scalper, don’t expect to set 5-pip stops and 50-pip objectives.

Making Money Management Decisions The goal of money management is to break even. —Charles B. Goodman

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Making Money
Management Decisions
The goal of money management is to break even.
—Charles B. Goodman

Money management is neither sexy nor easy to come to grips with for
most of us.
Because money management crosses over between trading tools and
style, it is always somewhat subjective. It is almost a soft element, but it is possible
to build a hard money-management framework. The trading campaign framework
I discussed in the previous chapter is such an idea. As long as the trader doesn’t
stray from the framework, ad hoc and subjective decisions are possible without
causing too much trouble. The markets are enormously dynamic and change is
necessary. The key is to keep changes evolutionary instead of revolutionary.

000

welcom

2011-02-18T03:18:00.001-08:00

welcom this is post 1001

Summary zero0

2011-02-17T05:43:00.000-08:00

Summary
I wish I could be more objective and quantitative about psychology and attitude.
But the nature of emotions is that they are qualitative and vary enormously

among traders. Each trader is unique and needs to think over all the factors
involved and make his own realistic decisions. In trading, the Socratic admonition
to “know thyself ” is so very important.
If you have psychological or emotional weaknesses, nothing will bring
them out faster, in the form of financial loss, than the markets. The more leveraged
the market, the faster it will happen. (See Figure 6.5.) Consistently monitor
your emotional state, keep good records, and frequently review your trades
vis-à-vis your emotions. When you make mistakes, learn what you can from
them and move on to the next trade with a clear head.

thank you zero cents

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Record Keeping

2011-02-17T05:39:00.001-08:00

Record Keeping
Accurate, honest record keeping is essential to knowing your emotions and
keeping them at bay. By studying your trading records, you’ll get all the feedback
you need to see how emotions are affecting your trading. In Part Four I
describe a daily and weekly trade plan and other records you should maintain.
If you can’t keep a daily report, at least keep a diary at the end of each
trading session. Whether you keep a diary or a report, each one should have attached
a session chart of each market you traded. In this way, you can periodically
review what you wrote vis-à-vis the markets you were trading at the time.

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Trading Campaigns

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$500 5,000 units
$2,500 10,000 units
$5,000 20,000 units
$10,000 50,000 units
$25,000 100,000 units
Each trader should adjust his three 10-trade campaigns according
to the appropriate risk/reward and stop/profit level for his own
trading profile.
As an alternative, you may trade by leverage ratio. Many
broker/dealers allow you to trade fixed leverage ratios between
10:1 and 50:1. Start low (10:1) and go up gradually (15:1, 20:1)
with each successful campaign.
Trading Campaigns
Don’t let losses discourage you. Even the best traders have periods of long
losing streaks. My record is 16 lemons in a row. I came close to throwing in the
towel. If you have several losses or a single large loss, the first thing to do is turn
off your computer (after closing all your trades, of course) and take a break.
Style 107

DEVELOPING A TRADING CODEX

Make the break time long enough to accomplish two things: (1) Clear your
head of trading and the intense emotion of the loss. This usually takes more
than a few days. (2) When you feel refreshed and clearheaded, analyze the
losses. What caused them and what can you do to prevent them from recurring?
Make the appropriate adjustments and begin afresh, slowly. Don’t dwell
on losses or profits; come to each trading session fresh.
Another tip: Don’t discuss your trading with anyone, at least not in any
detail. Avoid trading clubs and getting addicted to the numerous FOREX blogs
and forums now populating the Internet.

Ten Most Common Causes of Losing Trades

1. Overtrading.
2. Stops too close or unrealistic with respect to price objectives.
3. Spur-of-the-moment trading.
4. Trading high-volatility, high-directional-movement markets.
5. Trading the news instead of the reaction to it.
6. Trading outside of your market environment profile.
7. Trading crosses and exotics.
8. Trading over multiple sessions.
9. Trading when under duress.
10. Trading with money you cannot afford to lose.

zero

Steps to Emotional Success 0

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Steps to Emotional Success
“Know thyself ” is the old Socratic adage. Nowhere is it more important than in
the markets. The more leveraged the markets, the faster and harder personality
weaknesses will be driven to the surface.
Step One: I, Trader What sort of personality are you? We tend to define
traits in terms of pairs or dichotomies: positive/negative, introverted/
extroverted, calm/excitable. It is certainly possible any combinations from each
dichotomy could define a successful trader. But the odds, and my experience
over 30 years, seem to favor certain combinations over others.
A happy/extroverted/calm personality is probably the ideal successful
trader candidate. I am a positive/introverted/calm type. The greatest trader
I ever knew was Charles B. Goodman. He was a negative/introverted/calm
personality.
Perhaps the most critical personality spectrum is calm/excitable. The
markets want you to get excited. The excited person will tend to wear rosecolored
or gray-colored glasses when making decisions. Human nature being
what it is, we all tend to get excited at the most critical times—just when, as
traders, we need to be calm.
The only way to avoid this dilemma is to know in advance that getting
excited can and will happen. By monitoring your emotions, you can detect
early clues of the onset of overexcitement. Part of this solution is the daily trade
plan that I discuss in Part Four.
Keep notes of when emotions interfered with your trading—what markets,
what time of day, at entry or exit, and so on. You’ll soon see patterns, and
just knowing what causes your emotions to come unglued is a big step in controlling
them.
Step Two: Charting Your Emotions Use a chart to monitor your emotions. I
have used biofeedback techniques and they have worked well for me. Other
techniques are also effective.
Keep an hourly chart of your emotions for the spectrum that may give
you the most problems as a trader or just on a per-session basis. If it is

calm/excitable, as it is for most of us, make copies of a simple chart as shown
in Figure 6.4. You are attempting to quantify an emotional quality and that is
very difficult, but as a trader, you need something to help you consider your
emotional state. It also provides a long-term record for review.
At the end of each week you may want to line up the markets you’ve been
watching against your emotional points and observe for any correlations. You
will be surprised at what you see and what you can learn. Perspective is sometimes
enormously valuable to the trader.
Step Three: Handling Profits and Losses The biggest driver of emotions is
profit and loss. This is why paper trading is almost never particularly useful, at
least with respect to seeing how good a trader you are in the long run. Profits
make us happy and excited; losses make us sad and irritable.
Every new trader I have ever known has made money when trading a
demo account. When they begin trading real money in a real account, things
happen. The dynamics of trading real money are enormously different from
trading for fun.
If profits and losses cause too big an emotional swing, you may be making
trades involving too much money. There is an old saying, “Trade down to a
good sleep.” The money in play may be too much, or you are counting too
heavily on success. Don’t ever trade with money you couldn’t afford to lose or
give away to charity.
Don’t count your chickens before they hatch. I have seen traders do so
well on small accounts that they have quit their day jobs to trade full time, and
they quickly fail. Trade as a hobby. If you ever get to the point where you have
made a year or two years’ income in the markets over some significant period of
time, only then consider full-time, professional trading.

How much should you commit to trading? The simple answer is never trade
with money you couldn’t afford to lose or give away. That may be $500 or
$500,000. If you make some substantial initial profits, don’t get the King Kong
syndrome, quit your day job, buy a $10,000 trading station, and order brochures
from the local Mercedes dealer. Do add money to your account. Yes, add money.
This is an old psychological trick Charlie taught me, and—for newbies with small
accounts—it really works if only because it keeps the King Kong syndrome at bay.
How much should you commit to any specific trade? Many traders like to
rate their trades, perhaps from 1 being a good trade to 3 being a fantastic opportunity.
This may work when you have traded for a year or longer, but I don’t
recommend it initially; it’s just one more parameter to juggle, one more decision
to make. As a new trader, your pretrade ratings may not be accurate.
The “Trading Campaigns” table (see box) shows my recommendations for
trade size vis-à-vis total account size. I offer more on this subject in Chapter 7. I
recommend dividing your capital into 30 trading units with 10 units, or trades,
in three different campaigns. I learned this from Bruce Gould, commodities
trader extraordinaire, and it’s golden. Mr. Gould is perhaps the sharpest money
management guru in the trading business. His old newsletters from the 1970s
and 1980s are available from his web site, www.brucegould.com, and are definitely
worth reading by any new trader in stocks, commodities, or FOREX.

Trading Campaigns

Ten Most Common Causes of Losing Trades

Psychology and Attitude

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Psychology and Attitude
The sum total of all buy and sell orders determines what the market does and
where it goes. But all traders are human, and the primary emotions of fear and
greed lie hidden—sometimes not very deeply—beneath the buy and sell orders.
Even in this day of robots, black boxes, and computer-based trading with
no human involvement in the order-entry process, fear and greed reign
supreme. A human had to write the program, and that person’s propensities for
profit (greed) and loss (fear) are built into the code.
Your attitude and emotions will play some part in every aspect of
your trading. Every decision you make, large or small, has an emotional
104 DEVELOPING A TRADING CODEX
component—from the tools you select to the markets you monitor, to when
you enter and exit a market. They are always there, and denying them is a
poor solution.
Controlling your emotions is the key to success. Knowing they are there,
constantly monitoring them, and being able to keep them in check are your
goals from the time you sit down to trade to the time you walk away from your
computer.

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Style and Market Environment

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Style and Market Environment
After you’ve decided on markets to trade, keep an informal record of their market
environment characteristics. You’ll soon find you do better with some ME
combinations than with others. Armed with this information, you can more
easily sort future potential selections and market candidates. Eyeballing a market
involves watching the four market environment factors and the matrix of
your three time-scale bar charts. With this simple and visual tool set, you will
always be in very close touch with any market.

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Chart Scales zero cents 0

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Chart Scales
Remember, how you configure a chart can make a world of difference. Try different
colors and backgrounds. A 5-minute chart for 6 hours can look much
different than a 5-minute chart for 24 hours. Trading platforms and chart services
scale the data to fit the same size window. Select a time period that works
for you and keep to it consistently. Even resizing a chart on your computer
screen can make it appear different.
In FOREX little things mean a lot—it doesn’t take much to throw a
trader off stride!

Markets for Trader Profiles

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Markets for Trader Profiles
My favorite FOREX markets. Work with Tier One, move on to Tier Two.
Avoid Crosses and Exotics until you have mastered a few pairs.
The euro/U.S. dollar (EUR/USD) is the most popular pair traded. it
offers lots of liquidity and variety for all trader profiles. Be aware of U.S.
Federal Reserve announcements and U.S. Bureau of Labor and other governmental
reports. These news items can have a powerful and immediate effect on
prices, directional movement, and volatility. Pip spreads may balloon from 1 or
2 pips to 30 or more pips, especially if you are using a retail market-maker
broker/dealer.
My advice: Stay out of the markets during these times. Sit on your hands
and watch the reaction to the news for price trend indications. It is not
uncommon for prices to react in one direction after news, only to gradually
move back in the opposite direction over the course of the trading session.
Keep in mind that a market can look enormously different on different
chart scales and also within different time frames. Use only your three bar
charts and no others. A market’s personality may look different on different bar
charts, as a function of either the scale of the chart or the range of the chart.
The same currency pair may exhibit different personalities and market environment
characteristics over a 5-second chart, a 30-minute chart, and a daily
chart. Don’t let chart scales or ranges confuse you; it is easy to let this happen!

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Currency Personalities

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Currency Personalities
Some traders never figure out this simple and valuable fact: Different pairs and
crosses exhibit their own personalities. These personalities do change, but typically
only over a long period of time.
Personalities can be defined by the market environment factors of directional
movement, volatility, thickness, and rhythm.
Over a period of time trading you will find currency personalities that
agree with your style of trading—and personalities that do not. By keeping a
record of basic ME characteristics in your codex notebook you will learn which
are which.
I recommend a battery of five pairs and five crosses. As you trade, you will
certainly find other markets that appeal to you. Be sure to have a good sense of
their volatility before trading them. Watch a market for 30 days before ever
trading in it. Get a fine-tuned sense of its personality.

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Codex Markets0

2011-02-17T05:28:00.001-08:00

Codex Markets
I recommend that all traders begin with a single market—the most popular
one: USD/EUR. This pair represents the interaction between the two most
widely held currencies in the world.
The first determination for selecting further markets to trade is your
trader profile. The shorter term you decide to trade, the more volatile the markets
you should seek.
Some factors are not quantifiable. If you like the looks of a market and
how it trades, add it to your codex. Conversely, don’t fight a market that treats
you badly; deselect it and try another.