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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6 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.