Trader Dale Volume Profile

What instruments to trade?
Steps to chose the right trading instruments
Now that we have covered all the necessary stuff, let me give you a really simple, quick guide to
choosing the best currency pairs for you to trade:
Cut Costs – Especially if you trade intraday, you really need to cut the cost of trading as much as
possible. For that reason, I only trade the most liquid forex pairs (EUR/USD, AUD/USD, USD/JPY,
USD/CAD) where my costs are as low as possible. Again there are others acceptable pairs, but
these are my personal favorite. As a side note, trading costs are also heavily affected by the forex
broker that you are using. If you're not using a reputable forex broker with very tight spreads,
then I would recommend a switch in broker as well.
Test your strategy – At first, do some quick backtest to give you an idea of how well your strategy
works on different currency pairs. In my experience even quick and brief backtest can show you
if you should focus more on testing the given instrument, or if you should move to another one.
After that, you need some more thorough backtesting and more importantly live trading on a real
account. I won't get much deeper on the backtesting subject here since it will be covered later in
this book.
Chose only a few instruments – Make sure the pairs you select have low trading costs in addition
to making sure they fit your strategy well. Don’t try to trade too many pairs and my
recommendation would be to start with just one or two. Once you have the pairs, you’re going to
trade you then need to get really familiar and comfortable with them. After someone is proficient
in trading only a few select pairs, I have no problem with adding in additional pairs or markets.
Just keep adding a few at a time until you reach the point where you have the desired amount of
monthly trades.
Major currency characteristics
Every currency pair is unique and has its own characteristics. There isn’t a universal rule that
would tell you which pair to trade and which to avoid. As I mentioned before, you need to go
through them and see for yourself which ones fit you and your strategy best.
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