As traders, we’re spoiled with choices. And that can be intimidating…

There’s close to 3,000 companies listed on the New York Stock Exchange (NYSE) alone… Not to mention countless cryptocurrencies, exchange-traded funds (ETFs), and commodities.

Sometimes it’s paralyzing. How do you know where to start?

It’s a big problem because if you pick the wrong stock, then you’re going to take a loss on two fronts:

1. The stock might not perform, and you’ll end up losing money.

2. You must now pay the price of what’s called an opportunity cost. If you had picked a different stock, then you could be in a profitable position instead of a losing one.

While I do enjoy trading stocks every now and then… my favorite market is one that’s open 24 hours a day and is the most widely-traded market in the entire world…

I’m talking about forex, the global marketplace for currencies.

Forex can be as simple as a tourist swapping their dollars for Japanese yen. Or it could be as massive as a huge corporation exchanging tens of millions of euros into dollars.

One of the best features about the forex market is that there aren’t too many currencies to keep track of. There are only eight currencies I actively trade.

Sure, there are a bunch of other currencies you could trade if you wanted to… I’ve dabbled in currencies like the Thai baht, the Polish zloty, and the Hungarian forint. They’re like the forex equivalent of penny stocks – highly illiquid and extremely volatile.

Every now and then there might be a good setup in one of these exotic currencies. But for the most part they’re better left alone.

The eight currencies I focus on are the:

• U.S. dollar

• Canadian dollar

• Euro

• Swiss franc

• Great British pound

• Japanese yen

• Australian dollar

• New Zealand dollar

Collectively, these currencies are known as the “majors.”

When I’m about to start my trading routine for the day, I know that I won’t have to look hard to find a good trade. I only need to look at these eight currencies, which is a lot more efficient than hunting around for a great stock.

The first thing I do is group the majors into four different categories, which makes it easier to figure out where the best opportunities will be.

The four categories are:

1. Growth Currencies:

• Australian dollar

• New Zealand dollar

• Canadian dollar

Europeans:

• Euro

• Great British pound

• Swiss franc

Safe Havens:

• Swiss franc

• Japanese yen

• U.S. dollar

The U.S. dollar

You’ll notice that a couple of the currencies pop up on two different lists.

For example, the U.S. dollar can act as a haven, but it can also stand on its own. And while the Swiss franc is a safe haven currency, it’s also a European currency.

All these categories have their own interesting personalities.

For example, growth currencies are often bought when the market is optimistic about the global economy. The currencies in this category all have resource-based economies.

Meaning, when the market is feeling optimistic about growth, it’ll buy these currencies on the basis that companies will need to buy raw resources and materials to expand their businesses.

Understanding these categories is important to be a successful forex trader.

That’s why over the next few weeks, I’ll be covering these currency groupings in more detail.

I’ll also share how I’ve recently traded some of these currencies based on their unique personalities.

Happy trading,

Imre Gams
Analyst, Market Minute

P.S. There are endless opportunities to make quick gains in the forex market. That’s why I’ve been quietly testing a new trading strategy to take advantage of the historic volatility that’s taking place right now. So far, my track record is a perfect 12 for 12 trades.

In our current bear market, volatility can wipe out all of your gains quickly, which makes it hard to profit on stocks. But if you followed along on my last trade in forex, you would have made $2,008 in just five days.

Now’s the best time to look in other markets to make a steady profit. So stayed tuned as I show you how to best maneuver this exciting market.

Reader Mailbag

In today’s mailbag, Market Minute reader Ryan shares his thoughts on the future of the markets…

As expected, the Fed raised rates 75-basis points. The market ended up reacting the way most expected – heading lower. However, I think after the big drop yesterday, we’re going to see a short rally and then watch the markets continue to erode as companies who have depended on cheap money begin to struggle.

The “zombie” companies who’ve lived on cheap money are now in the crosshairs and will likely go belly up over the next couple of years. I grew up in the ‘70s and early ‘80s and distinctly remember how tough the economy was back then.

Unfortunately, I think we’re about to see something similar unfold. But I’m hopeful that we can resolve the issue in a much shorter time frame.

– Ryan W.

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at feedback@jeffclarktrader.com.