I trade British Pound Sterling against the US Dollar exclusively. (GBP/USD Forex spot market)  This pair is sometimes referred to as ”Cable”.

When I began dabbling in Forex trading in 2005, I badly wanted to run a system across multiple currency pairs to acheive some level of diversification. However, I found that the results I was getting from GBP/USD dwarfed the results I was acheiving in any other pair. When I think about diversification today, I don’t try to diversify within the currency market, but rather I diversify across asset classes, choosing to hold some other trading capital in stock index funds and money market accounts.

GBP/USD moves rapidly and fits my trading style. I think if I were to base my decision of which market to trade based on opinions I’ve seen while browsing the web, I’d gravitate toward EUR/USD because of the depth of liquidity and lower trading spreads. My liquidity provider almost always maintains a spread of 2 pips on EUR/USD, while the spread on GBP/USD is typically 3 to 5 pips. I’m always on the lookout for ways to reduce my trading spread, but clearly, for me, the simple fact that spreads are lower in the Euro pair do not justify the switch.

Finally, I’ve found that focusing on GBP/USD exclusively makes it much easier for me to manage the total risk in my account…if I were to trade multiple pairs, I would need a tool that would let me do portfolio level backtesting, and I’ve yet to find a satisfactory product for that purpose…then again, at this point, I’m not even looking.