Choosing pairs and timeframes

The first five modules described the market. This one describes a way to stand in it that does not depend on being clever. It starts with two constraints most beginners refuse to accept: trade very few pairs, and trade one timeframe.

Why two or three pairs

A broker lists sixty pairs. Watching them all feels like more opportunity; in practice it is more noise, more correlated exposure, more calendars to track and less knowledge of any one of them.

Choose two or three, and choose them by these criteria:

For most people that produces one of these sets:

• Trader available in the London morning or the overlap: EUR/USD and GBP/USD, plus USD/JPY as a third that is less correlated.
• Trader available in the New York session only: EUR/USD and USD/CAD, with US and Canadian data at 08:30 ET.
• Trader in Asia-Pacific hours: USD/JPY and AUD/USD, with AUD/JPY optional once the first two are familiar.

Notice what is not on the list: exotics, three yen crosses at once, or "whatever is moving today." The pairs you trade should be boring to you in the sense that you know their spread, their ADR, their session character and their calendar without looking them up.

Why one timeframe

Every timeframe is a different market with a different cost structure:

The cost column is the important one and it comes straight from Module 4. On the shortest timeframes the broker takes a fifth to a third of every trade before anything else happens, and only a very good trader with a very good broker can survive that. On the hourly chart and above, cost is a rounding error and the main problem becomes patience.

For a beginner the 1-hour or 4-hour chart is the sensible place to start: enough trades to learn from, cheap enough that the spread is not the enemy, slow enough that decisions can be made without a stopwatch. Use the daily chart for context and the 15-minute chart, at most, for timing an entry. Do not take setups from three timeframes at once; pick the one your setup lives on and let the others inform, not decide.

Key idea: Few pairs and one timeframe is not a limitation; it is how you become the person who knows how EUR/USD behaves in the London morning on the hourly chart, which is worth more than being vaguely aware of sixty pairs on six charts.

Matching timeframe to your life

Be honest about the hours you have. The question is not "which timeframe is most profitable" but "which timeframe can I execute consistently given my job, my sleep and my time zone?"

• Two hours in the London morning before work: 15-minute or 1-hour setups on EUR/USD and GBP/USD, entries and management inside that window, positions closed or set-and-forget by the end of it.
• Evenings only, in the Americas: the market is thin. Consider 4-hour or daily setups placed as pending orders for the next London session, and accept that you will not watch them fill.
• Full days available: 1-hour setups across the overlap, but the danger is boredom trades; a rule for maximum trades per day is essential.

A plan that requires you to be at the screen at 08:30 ET when you are commuting is not a plan.

Reading the pair before trading it

Before placing a single trade on a pair, spend two weeks watching it with a notebook. Record every day:

1. The Asian range, the London range and the New York range.
2. The spread at your intended trading time.
3. Which scheduled releases moved it and by how much.
4. Where the daily high and low were made (which session).

After two weeks you will have the pair's ADR, session range, cost and calendar profile from your own hand. That data feeds the plan in the next lesson.

Try it: Write down your available trading hours in your local time and convert them to London and New York time. Against the session table from Module 3, note which sessions you overlap with. Then pick two pairs from the sets above that fit those hours, and one timeframe from the table whose time-at-screen requirement you can actually meet. Write all three down; that is the top of your plan.

Recap

• Trade two or three pairs chosen for cost, liquidity in your hours, range, calendar load and low correlation with each other.
• Trade one setup timeframe; use one higher timeframe for context and, at most, one lower for timing.
• Cost as a share of stop rises steeply below the 15-minute chart; hourly and 4-hour charts keep it near 2% or less.
• Match the timeframe to the hours you can consistently be available, not to what seems most exciting.
• Watch a pair for two weeks and record its ranges, spread and calendar reactions before trading it.