Anyone who has spent time studying and investing in the stock market knows the importance of diversification. This is one of the most looked at and talked about terms in portfolio management. Even non business oriented people have heard the term. This article is not going to go into depth going over the reasons for practicing it; rather we will look at its implications in the forex market.
Have you ever seen a system for sale or talked to other trades that claim one currency pair trades better than the others. Or a step further, it is easier to trade the eur, than it is the chf? Well in manual trading and other systems this may be the case. I would caution anyone to use a system that is only suited to one pair. If the system is only able to perform well on one currency pair I question its true validity as a successful system. Shouldn't a system work for all pairs or any instrument that is traded? The more markets that can be traded with a system the more valid it must be. If one person optimizes a system based on 10 years of past data for one currency pair you might be impressed. But what happens when the 11th year all the past data looks totally different from the new market conditions? Different forex and futures markets can trade a certain way for 10 years at a time and immediately change behavior. Any system that worked before, is likely not going to work in the future.
Don't be discouraged. Top traders have used the turtle trader system for over 30+ years trading in 40 different markets. Not just 40 different instruments, but separate markets. For instance the euro, Swiss franc, British pound, and the yen would be one market. Now those are results that can be trusted to be statistically significant. This is just one of many reasons why the turtle trading system is the best system out there for automated computer trading.
R.A.
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