Features of currency pairs
- Analyst AZA
Features of currency pairs or how to choose the right one
At Forex, the choice of a currency pair is not such an easy task. And especially when it comes to a novice trader: he is not familiar with the specifics of trading instruments, he does not have a deep knowledge of the specifics of the trade.
That is why, in this issue, it is necessary to adhere to certain rules: each currency pair has its peculiarities of trade, which should be taken into account to ensure its success in the field of trading.
Each currency pair is unique in its way: trading tools have different specifics of the movement, behave differently during different trading sessions. The new reality, focusing on currency trading and selecting a few pairs, a trader can well deal with them, and gaining experience, move on to the next.
Unfortunately, very often, many newcomers either do not want to perceive anything except the standard and popular euro/dollar pair, or generally sell everything in a row, using exotic and all available tools, and eventually dissipate their attention, lose money.
And experts and market professionals recommend all novice traders, to start with one tool. Because knowing the properties and characteristics of the traded pair, you win.
The first thing you should allocate for yourself is which tool is the best for trading. For a beginner, it is more desirable to use pairs with low volatility: in case the trader neglects the installation of a stop-loss, he does not lose all savings.
So, let's proceed to a detailed examination of the currency instruments of the market, which are actively traded by the exchange's participants:
1) EUR / USD
The euro/dollar currency pair is one of the most popular, often used and well-known for all beginners and experienced speculators.
The pair are often traded, as it has low spreads, technical analysis, forecast and a lot of information are available on it.
The EUR / USD movement is affected by news-events such as NFP, FOMC, the economic situation in the US and Europe, the speeches of the leaders of states and world-scale events.
The pair is very active in the London trading session, demonstrating the movement, but often this tool behaves calmly throughout the day. Trade will best be conducted on the daily price range (averaged).
For most of the day, the euro-dollar pair moves only in one direction, choosing fairly deep Fibonacci levels.
Despite such high ratings relative to other currency instruments, trading experts advise newcomers to choose another trading instrument, a pair that has a higher level of activity (this will give a better chance of profit than with the euro-dollar)
2) GBP / USD pair
This currency pair is characterized by a good level of volatility, and undoubtedly high movements (the largest of which it shows during the London session).
With such activity, the frequency of false penetrations increases substantially.
Therefore, players need to be careful and accurate.
Price breaks the line of support and resistance, and the pair rolls back to such Fibo levels-75.6 and 88.2.
The daily range (price movement) is high, and the pair moves against the trend, thereby suggesting counter-impulse trade.
Some UK news reports can affect the pair, but as a rule, during the trading day, the market remains at rest.
The greatest impact on the tool is provided by news from the US, Europe and the UK in particular.
3) the pair USD / JPY
This currency pair is strongly influenced by large-scale news, which is related to the US dollar.
Also, note the following nuances:
- During the period of consolidation of the pair, it slows down fluctuations, and usually, trade is conducted in small intervals;
- at the time of a strong pair trend, it follows a trend, and therefore, kickbacks are virtually eliminated.
This means that the trend can last (but with pauses)
- for the trend period, the Fibonacci levels will be determined by such values - 23.6 and 38.2.
4) currency pair AUD / USD
This is the opposite of GBP / JPY pairs (or GBP / USD): the movement of the pair is slow, and the price moves in one direction, but there are frequent rollback periods, and then the trend resumes and continues its movement.
News that affects the Australian currency also affects all the pairs in which it is present.
The pair is active not only during the Asian trading session but also moves significantly in the session of London and New York.
5) the pair EUR / JPY
The EUR / JPY shows a good level of activity, more than the GBP / JPY pair, and therefore less than USD / JPY.
It can easily choose any player of the exchange, regardless of the style of trading, the pair is universal forex trading.
For a beginner in the forex market, it's best to start with one, two currency pairs. Do not simultaneously trade on a large number of tools: it is better to concentrate on the specialization and study in more detail several selected pairs.
Choose pairs for which a lot of information is available, you can conduct a good technical analysis, and also they can demonstrate trend movements.
When choosing, take into account such a nuance as the correlation coefficient - it should equal zero, that is, the pairs should not be closely interrelated with each other.
Also take into account the peculiarities of your trading style, strategy, information of the couple.
We wish you a successful selection and profitable trading!
And experts and market professionals recommend all novice traders, to start with one tool.