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WATCHING MULTIPLE CHARTS
When you are scalp trading it is good to have multiple charts open of different
currency pairs all viewed on one-minute candles.
The selection of currency pairs is important for a few reasons. First of all only
watch the currency pairs that you are allowed to scalp based on their pip
spreads. You must have EUR/USD as on of your charts, but the others can be
based on your personal preferences.
I recommend having the following four currency pair charts
displayed. EUR/USD, USD/JPY, EUR/JPY, and AUD/USD. There are very
specific reasons for this selection.
The first reason is that you have a major currency from all the major
markets. JPY from the Asian market, EUR from the European market, and
USD from the N.American market. Notice that you have all the combinations
of these three currency pairs on three of your charts. This is good because you
now have “Relativity” (as I like to think of it).
What is “Relativity”? (Not Einstein’s theory of Relativity, but the Borowski
version) Let me illustrate for you. Let’s say that the markets are consolidated
(on all three pairs), often you’ll see that two of your three charts will start to
begin moving, while the third chart appears to be relatively unaffected. You
now know which currency is the driving force behind the movement. It is the
currency that is common on both charts that moved, but is absent on the
third. For example, if USD/JPY & EUR/JPY were the two that moved then
you know that the Asians were doing something and the JPY was the force
behind the movement as the value of the JPY was somehow being affected.
Why do I often have the AUD/USD? Simply because it is one of my personal
preferences, plus the fact that it often moves during the evening hours (from
my time) when usually the other pairs are quieter. It is also a pair that I watch
to contrast against the EUR/USD as it closely mimics EUR/USD, but it is just
another filter for me to pay attention to the affects of USD without the
influence of EUR.
There is another significant reason for using such combinations of
charts. Often times you’ll notice that the other charts containing a common
currency may shoot or just simply start moving, and THEN a similar action
takes place on another chart a few moments later. By seeing what the other
charts are doing it can give you a “heads up” warning of what you might
potentially see on another chart.
It is also important to keep in mind that the “relative action” will happen that
both charts move in the same direction of the currency that is moving it is on
the same side of the “forward slash” ( / ). In the case of USD/JPY &
EUR/JPY both charts will move either up or down if it is the JPY that is
moving the market. In the case of EUR/USD & USD/JPY, if the USD is
moving the market then the charts will move in opposite directions simply
because the “USD” is on opposite sides of the “forward slash” ( / ).
Allow me to go off on a slight tangent for a moment to share something I’ve
been thinking about for a VERY long time but still haven’t yet figured out
how to profit from. I am sharing this here simply because it is somewhat
related to the above topic. If someone who reads this can figure out a working
theory on how to make this work then please contact me to share your
thoughts. --- I have a theory that I call the “Market Efficiency Theory”. In a
triangle involving three currencies (as described above), when the value of
one currency pair changes then the value of one of the other two, or both
currency pairs MUST be affected as well in order to maintain an equilibrium
of value throughout the currency triangle. If you were to trade one currency
for the second currency, then trade that second currency for the third currency,
and then trade that third currency back to the original first currency there
should theoretically be no gain or loss of value (ignoring spreads which would
of course result in a net loss). I believe that if you were to analyze the market
between three currencies that there must be periods of time (such as when
there is a strong market movement) when the equilibrium is out of
sync. Sooner or later it must be corrected, and due to the correction there
might be a way to squeeze out some profits. I think I’ve explained the
concept here well enough for you to understand. If you are a clever individual
and are up to a challenge then play around with this idea. If you should
happen to figure out how this idea might work in real life to profit from it then
please contact technical support to relay a message to me (please understand
that I might be slow in contacting you back). See, I come up with tons of
concepts, but not all of them have yet been refined.
Back to the topic of “Relativity”.
One more tip to provide – sometimes while in a trade you may see another
chart move in a direction sharply that implies a contrary direction for the trade
you are currently in. Sometimes when this happens you can be forewarned of
a potential reversal affecting you so you can have at least a few extra seconds
to evaluate your contingency plan. Thus multiple chart views isn’t just to help
you to enter trades, but can also help you time your exits too.
So there you have it. You now have a couple of good reasons for having
multiple charts displayed, not because you plan to trade all of them (but go
with the opportunities you find), but rather because being able to see multiple
currency pairs shows you an added dimension of market activity that may help
you in making trading decisions.
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