You can trade the Simple Trading Method taught in Forex Nitty Gritty on many different currency pairs. This is great because you can monitor as few or as many pairs as you want.  New traders can start off with 1,2 or 3 currency pairs like EURUSD, GBPUSD and USDJPY.  More experienced Forex traders can look at more pairs for even more trading opportunities.

Today’s Forex Nitty Gritty Daily Video was about currency correlations.  What this means is there are currency pairs that move in a similar fashion.  Now, while this is not a rule that is always the case… it is very common.

For example, the EURUSD and GBPUSD seem to move in the same direction at the same time.  At least most of the time.  On the other hand, the EURUSD and USDJPY tend to move in opposite directions.  You should take this into consideration when choosing the currency pairs to follow using the Simple Trading Method.

Here are a couple of things to keep in mind…

1) If you choose to trade currency pair that are correlated… you can potentially double your profit.  Since they move together, you tend to get trading opportunities on both currency pairs at the same time.  So theoretically, when you get a winning trade setup you could win on both.

2) You could also double your risk. If you place two trades on two currency pairs that are highly correlated and they turn into losers… you could double your loses.

So, you need to take price correlation into account when you choose the currency pairs to follow when you are trading the Simple Traiding Method taught by Bill Poulos in Forex Nitty Gritty.