January 11, 2012

Why You Should Stop Trading The USD/JPY Pair In 2012

I stopped trading the USD/JPY last year because it was proving to be very difficult and the big price swings were becoming less and less frequent. Well the bad news is that it seems to have got even worse in 2012, and the USD/JPY pair looks as if it is on a life support machine at the moment.

For this reason I don't think anyone should be trading the USD/JPY pair at the moment. The price movements are just too small to make any real money from.

To demonstrate this point, just look at the weekly chart of the average true range (as indicated by the ATR indicator) of the USD/JPY pair since 2009.


You can see that the average weekly range was around 430 points just prior to 2009, and since then it has fallen lower and lower, and now stands at a pitiful 117 points. Remember this is not 117 points a day, this is 117 points a week!

Furthermore on a daily basis, the story is equally as bleak. The average daily trading range has often been in the 50-60 points region, and sometimes more, but it has dropped off sharply to what must be close to an all-time low of just 31 points. Day trading is hard at the best of times, but trying to squeeze out a decent profit when the USD/JPY pair only moves within a 31 point range every day is near on impossible.

So as I say, I really don't believe it is worth trading the USD/JPY pair at the moment. Unless the daily ATR indicator returns to 50 or 60 points, it is probably best to concentrate on the other major currency pairs instead, such as the GBP/USD and EUR/USD pairs for example.



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9 Comments on Why You Should Stop Trading The USD/JPY Pair In 2012 »

January 11, 2012

FXRebates @ 7:36 pm:

I was already avoiding this pair in the end of 2011 and stopped trading it completely at the end of the year.

January 12, 2012

frank page @ 3:02 am:

Hi James!
Happy New Year! The usd/jpy is just one of many pairs not suitable for trading right now. I monitor the 8 major currencies which gives me 28 currency pairs. Using my currency strength meter (as a filter) shows the the usd.jpy to be wkly +2, daily +3 right now. I will not trade any pair with a reading less than 8 (actually prefer +10!). So yes the usd.jpy is out for now. Tip: try eur/nzd (dly 14), nzd/chf, eur/aud (all above 10!. Trading as above is a very safe way to trade but requires some practise.

January 13, 2012

Philip @ 4:51 pm:

Especially true when you are comparing the spread cost against its range. It's definitely not worth the while, not to mention the Japanese regular intervention nowadays.

January 17, 2012

Forex @ 9:38 am:

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January 26, 2012

Trevor @ 2:38 pm:

Frank Page:

How do you get readings for 28 pairs?

I downloaded Currency Strength Meter (PC only) but it only displays USD, EUR, GBP, CHF, CAD, AUD, JPY, NZD (7.00).

Is there any way of getting it to display specific FX pairs?

January 27, 2012

Spectrum Live @ 5:55 am:

A great way to trade the forex market is via forex options. Traders can choose their strike price as well as expiry up to 12 months. With the currency markets being as volatile as they are, day trading has become a challenging experience. Forex Options allows traders to potentially fix their risk as well as ride out the whipsaws.

March 5, 2012

frank page @ 3:35 am:


I monitor the 8 major currencies as listed in your message. Then I drew up a list in excel of all the pairs from these currencies (28 in all). To gauge the strength for say weekly charts. Place an ema or sma on each chart ( I currently use 21ema). Go thro each chart in turn. If price is above the ema on say gby.jpy I award gbp +1 and jpy -1. Do this for all 28 pairs. At the end you will have a number for each currency from +7 to -7. Generally I am only interested in pairs above +4 or below -4. I match up the strong with the weakest. It is a long winded approach but I find it is well worth the effort. I generally do the above for weekly and daily charts about 3 times/week.It acts a filter and I generally find I am left with 4-6 pairs each week to look for trading opportunities. Also I find it is very reliable! Good luck hope this helps.

frank page @ 7:09 am:


If you read this! To correct above. You will get readings for each currency between +7 to -7. To find a currency pair strength subtract the high score from the low score e.g. NZD=+6, JPY=-6. then NZD/JPY= +6-(-6) = +12. The max score for a currency pair is 14 (always a positive number). I generally look for pairs with readings above 10 to 14 MAX. Right now on wkly NZD=6, AUD=6, EUR=-5,JPY=-7. Therefore nzd/jpy & aud aud/jpy are both have scores of 13 (out of a max of 14!).

May 26, 2012

Trading Lectures @ 3:39 am:

Hello ..

From the technical part the pair is in a long and strong down trend on the weekly and monthly time frames ..

Even the close of the last month was a bearish engulfing so there is no signs at all for this pair to rise until we see at least monthly closes above the 88.00 level from a swing point of view ..

Here is my chart


Finally i would like to thank you for such a nice article hoping the best for all ..

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