Just because a currency pair is “different” and not a major or a minor, it does not mean it’s completely defunct of yielding highly lucrative opportunities…especially as we trade what we see and not what we think.
Here, I’m talking about the commonly overlooked Scandinavian currency pairs, often referred to as “Scandies”. Like any other currency pair they are represented and traded according to what price-action set up there is on their currency’s chart, and, like any other currency pair, there are the same external factors cause them to ebb and flow in the pathway of least resistance.
Whether it’s a price-action set-up on the Daily chart of USDNOK, GBPNOK, or even an opportunity on the USDSEK chart which stands out like a sore thumb, console yourself with the fact that even though it may not be a “mainstream” pair we read or hear about, it does not mean we cannot profit from it the same way as we can a more “generic” pair like EURUSD or Aussie Dollar!
After all, we trade price action according to what we see on the chart and price action behaves the same way across a spectrum of different markets, enabling us to trade and potentially profit from this variety of markets in exactly the same way…universally (however, we stick to currencies because of its liquidity and because it’s less likely to gap or be manipulated compared to an AIM listed stock!).
Throughout my time mentoring private investors for the past three years, I have noticed a common leaning towards the majors and minors where these pairs are traded almost exclusively of the higher timeframes, often at the expense of the lost opportunities on the more exotic pairs. Why is this?
Maybe it’s because the private investor prefers to trade what Joe-average is trading and does not want to be “different” when talking shop. Perhaps it’s because people don’t like trading currency pairs relating to counties they have not been to, understand or know. Maybe they are considered too “illiquid” to trade. Perhaps it’s because the spread quoted by the broker is “too big”. Otherwise, I don’t know…you tell me!
I cannot remember the last time I traded a minor or a major currency pair for that matter. The crosses and more exotic pairs are a lot more seductive for me in my end of day campaigns to pillage pips from the markets.
Mention GBPNOK to me my back in 2008 and I would ask whether that pair was even legal, yet alone tradable. However, this month its gains represent the lion’s share of this month’s profits.
How on earth did that happen?
I simply traded it the same way as I would any other darn currency pair! I do not discriminate against currencies. I operate an ‘equal opportunities for all’ policy. Yes, no matter what the pair is, I give it the same opportunity to prove to me that they are giving me a bonafide technical opportunity to milk the proverbial cash cow.
In the case of GBPNOK, I had a long order placed to catch the break of Friday’s high test bar (19th October) which intersected with the soft 90401 level.
Below: GBPNOK – Daily Chart – 19th October 2012
Armed with the logic that if the high of this high test bar was breached, it would demonstrate to the world at large that the bears/sellers which were once there defending this high test bar’s high would no longer be there. We decided to place the order, it triggered on the 19th and am at a gain just shy of 4%. Monday was a smash day and it was traded the same way as if this price action set-up was on the AUDNZD, GBPCHF or the Mexican Peso!
Also, take a look at USDNOK. On the 18th October – there was a classic low test bar on the 56104 level which is a very strong level to buy. What’s not to like about that? The currency may be obscure but it still behaves the same way as any other currency.
Below: USDNOK – Daily Chart – 18th October 2012
At the time of writing this, we are currently selling USDSEK, based on a price-action set-up, giving us exactly the same reasons as we would trade any other currency pair in that direction; a high test bar off a ‘soft’ level which correlated with a psychologically significant round number @ 6.8000. Again, what’s not to like?
Below: USDSEK – Daily Chart – 8th July 2012
In short, I highly recommend to trade all currencies available to you while not over exposing yourself because it is just a chart you are trading, nothing more, nothing less. You certainly won’t be trading political beliefs or your understanding of this country’s culture – it will be the story of what the price action is telling you in the great two-horse race in how the value of a country’s currency fares against the other.
If you trade exclusively end of day and you are that little bit more adventurous and increase the number of currencies which you trade while keeping your strategy constant then you could very well find that it is the more obscure currency pairs which bring home the bacon (or the Halal lamb if you’re not a lover of pork).