Trading The Japanese Yen

Traders,

I am currently working on a radio podcast and I discuss my favorite trading pairs.

So what is my Favorite Forex Trading Pair? The USD/JPY of course! This is one of my favorite pairs, and I often trade this pair daily, when I get the proper signal. Trading the Japanese Yen can be a challenge if you are not ready to hedge during news, or at choppy times in the market. When referring to 'choppy' I mean the times in the Forex market when the pairs do nothing but move in tight ranges, making it very difficult to make an intraday profit.
If you have ever traded Forex during the summer or around Holiday you will understand what I mean.

Trading The Japanese Yen - Correlations?

Getting back to discussing the USD/JPY, this is indeed my favorite. I have noticed in my 15 years of trading that it often has an excellent correlation with equities and the 10 year bond. As a 5 year veteran Wall Street trader I learned fast what I need to do to tackle fast moves in equities to make my trading goals for the day. Trading the USD/JPY allows me to hedge my equity positions in addition to providing great trade setups during key news announcements.

Trading the GBP/JPY

This is another pair I enjoy trading. Typically, this pair is one of the most active in the early U.S. session when London is trading Forex. I think this pair has one of the best Forex equity correlations than any Forex Trading pair. Here is some strategies I apply when I am day trading the U.S. session.

1.) Volume Equity Pushes: I use certain indicators to determine if we have a push up or down in equities. If I see a substantial amount of volume I will decide if I will ride a move in the GBP-Yen based on its strong correlation to the SPX500. You must be very critical with your correlations when day trading, make sure the correlations are proper and working for that day before hopping into any trade.

2.) News Announcements: Depending upon a news release and setup formation I will decide before a news announcement if it is worth the effort for me to get into a day trade.

3.) Fundamentals: I enjoy trading the Japanese Yen since it has a nice relationship to the fundamental Japanese economy unlike other pairs like the EUR/USD. This point I often outline in our Forex Day Trading Room at fxlivedaytrading.