3 Currency Pairs to Watch as We Enter 2020

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3 – Reading & Understanding The Currency Pairs

Introduction

From the previous lesson, we know that global currencies are traded in the Forex market. These currencies are exchanged in pairs. We also understood what Major, Minor, and Exotic pairs are. In this lesson, let’s discuss more characteristics of these currency pairs.

Out of the three types of currency pairs, the most traded type are Majors. These major pairs contribute more than 85% of the total Forex trading volume. Prices in these pairs move in tighter spreads, but they are a bit volatile during market opening hours. Major pairs are those who have USD in them. Some of the major pairs are EUR/USD, USD/JPY, GBP/USD, and USD/CHF. The other vital pairings which do not include the US dollar are known as ‘cross currencies.’ Some of these are GBP/EUR, EUR/CHF, EUR/JPY, etc.

Reading a Currency Pair

Since we are talking about currency pairs and the Forex market, it is essential to learn how to read them. Every currency has a three-letter symbol defined by the International Organization for Standardization(ISO), which is straight forward. Below is the terminology for some of the major currencies.

  • British Pound for GBP
  • US dollar for USD
  • Japanese Yen for JPY
  • Swiss Franc for CHF
  • Euro for EUR

To understand the reading of a currency pair, you need to know the meaning of base and quote currencies. The first currency in a Forex pair is called base currency, and the second one is called quote currency. As we know, trading the Forex market involves selling one currency to buy the other. For instance, we sell the base currency to buy the quote currency. Let’s say you are trading USD/CAD. USD is your base currency, and CAD is your quote currency. Here, when we are executing a sell trade on this pair, we are primarily selling USD to buy CAD. And vice-versa if you are placing a buy trade.

How much one unit of the base currency is worth against the quote currency defines the price of a pair. In the above example, if USD/CAD is trading at 1.32267, that means one US dollar is worth 1.32267 Canadian dollars.

Liquidity of Major Pairs

Liquidity in these pairs is the highest when compared to other pairs. The larger the import/export value between two nations, the more liquid the currency pair of these countries will become. EUR/USD is the most liquid pair in the world. Major currency pairs should not be confused as the best currency pairs to trade. Trading a particular currency pair depends more on strategy and market sessions. When we say ‘major,’ we mean the most actively-traded Forex pair. The six most actively-traded Forex pairs are:

One of the reasons behind these currencies being traded so extensively is the political and economic stability associated with these currencies. Big investors feel it is safe to park their money in such economies.

What Should You Trade?

If a currency pair has high liquidity, the volatility of that pair decreases. Currency pairs that are linked with the market openings should be our first choice. For example, it is recommended to trade the US dollar during New York open or trading the Australian dollar during Asia opening, as there will be good volatility during this time. Also, consider economic news releases, technical chart analysis, and other events while choosing the currency pair to trade. For people who have just begun their Forex trading journey, it is recommended to start trading major currency pairs before experimenting with minors and exotics. Now try answering the below questions.

As markets panic, Russian Ruble is WORLD’S WORST performing currency in 2020

By Jonny Tickle

At various stages since 2020, it has been the world’s best-performing currency, before tapering off again. Now, as markets plummet worldwide amid coronavirus and oil shock panic, wouldn’t you know it? The ruble is plumbing the depths.

It’s presently the worst-performing currency in the world in 2020, against the benchmark US dollar. That’s according to the Forex market, which records that as of Wednesday evening, the ruble has fallen by 28.59 percent since the beginning of the year.

As the Euro reached a mark of 88 rubles, the US dollar struck a new post-February 2020 high, rising above the 80 dollar mark to 81.

Numbers late on Wednesday show the next worst-performing currencies behind the ruble as Brazilian real, which has lost 28.21 percent, followed by the Mexican peso at 26.91 percent.

Russia’s currency has taken the tumble due to two main events – the coronavirus outbreak and the sharp drop in oil prices, caused by the breakdown of the OPEC+ deal between Moscow and the Saudi Arabia-led bloc.

Speaking to Moskovsky Komsomolets, economist Eugene Gontmacher highlighted that the ruble had actually strengthened against the dollar at the end of 2020, and subsequently, “it seemed to our authorities that the economy is no longer so dependent on energy exports.”

Gontmacher argues that the recent movements of the ruble have proven that this is far from the case and that the Russian economy clearly “did not overcome the dependence” on oil. Brent crude, which started the year at 66 dollars per barrel, now sits below $30.

While the Russian response is as yet unknown, a Bloomberg survey of 35 economists showed that all but one expect Russian Bank Governor Elvira Nabiullina not to cut rates, bucking the international trend of developed countries, which have mainly come forward with rate cuts as an emergency measure.

For more stories on economy & finance visit RT’s business section

Thread: What are the points to watch before entering a trade in a new untraded Currency pair?

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What are the points to watch before entering a trade in a new untraded Currency pair?

The biggest challenge nowadays is to trade with a new unknown currency pair and for that according to me some points should be noted and they are as follows :-

1. A good research or the back test is needed so that traders can notice the previous movements of the currency pair which can give them the real boost to trade with .

2. To trace out whether the trading currency pair is compatible with the proper trading strategy .

What about you people can you spot some more points associated with the aboves .

When we want to enter a trade in a new non-traded currency pair we should consider the following points :
1- We should look well for its previous and historical movements for knowing well the strongest resistance and support lines that we can open trade positions from when the price reaches to them and to know well the nature of pair movements whether it typically moves in up or down trends or in a side way .
2- We should open our trades only from the strong entry points in the market because the trading from bad entry points in these new pairs will not help us to gain profits because their movements are typically not be obvious.
3- We should know well the strategy that can be successful during the trading in this pair because our strategy may not be successful with this pair because the movements of these new pairs are very slowly and typically don’t follow signals of technical indicators .
4- We should trade in these pairs by very low risk until we understand their movements well then we can increase the level of risk to avoid losing any big portion from our trading balance if we surprised from any sudden movements from these new pairs .

Opening of trades in a new Currency pair which has not been traded before is just like doing so with any other Currency pairs which you have been trading with for a long time, the only difference is rhat there might be some irregularities or disparity between the way the prices of the new Currency pair to be traded fluctuates. Therefore it is very important to study the history of the of new Currency pair to know how it’s market movements happens, whether there are some irregularities in it’s movements which makes it different from the way other Currency pairs are been analysed and traded, therefore a different strategy or a slightly modified strategy may be applied.
When we finally wish to make tradings with these pairs, we should do so using a very low amount of risk at least for the first few trades so as to be certain of what to expect in the new Currency pair before finally making the trade with high amount of lot size and increasing other risks so as to make good profits.

The non-traded currencies can be very interesting and very profitable when traded with the right strategy, but it can also be very dangerous to trade and there unique reviews to consider first. The clue to adequately transacting the non traded currency pairs is to analyze the economy and government of the Home countries in order to have an extensive knowledge of how their economy is run and the underlying force of that type of pairs.

Before diving into the non-traded pairs, it is important to note two things; the currency pairs are often unpredictable and less liquid than other types of market pairs. During the course of market volatility, the price moves very frequently and very tense. Due to this, volatility gives a chance to make profits deluge to sudden change of price movements, nevertheless this can also lead to significant loss. It is important to study the history of that pairs in order to have an idea of possible movements of the market.

A new currency pair may appear strange and may be a great challenge trading it but one basic truth that is well established is the market has basic principles that it obeys and that is the essence of technical analysis,fundamental analysis and market psychology.
Definitely a good trader must have developed a personal strategy which must have stood the test of time and thus all he needs to do is to use the same strategy on this yet-to-be-trade pair and see how it works.There may be need for updating or upgrading the strategy in order to adapt it to the new pair but all I know is that with discipline and patience the new air will not be a problem in anyway

The biggest challenge nowadays is to trade with a new unknown currency pair and for that according to me some points should be noted and they are as follows :-

1. A good research or the back test is needed so that traders can notice the previous movements of the currency pair which can give them the real boost to trade with .

2. To trace out whether the trading currency pair is compatible with the proper trading strategy .

What about you people can you spot some more points associated with the aboves .

All those unknown pairs will be known soon after we choose them to practice and get familiar with. It’s a matter of time until we can get to understand them and able to find out about their characteristics, correlations, and volatility level after reacting to specific factors in the market that related to fundamental and technical analysis. I like how you describe the points above how we can get used to the unknown pairs, but I also have my preferences and experience of doing the same way with my trading. They are:

1. Practice with demo account and choose to trade with those unknown pairs,
2. Try monitoring the movement during specific trading sessions and pay attention to what’s happening to them whenever there’s a news with high impact is coming to release,
3. Use another reference from the contest’s participant who previously won the contest and see what are the pairs they were used to winning the contest. If there any of them who used unknown pairs we haven’t experience before, then we can evaluate their performance and learn the reasons why they took specific trade at a specific time in the market,
4. Before taking those unknown currency pairs, we better look at their spread first because if it’s too wide we better not choosing them as our main pairs. Major and minor pairs are still better to use.
5. Make some comparisons between currencies pairs to get the point which one that has excellent volatility and best reaction that suitable for our strategy.

One thing certain in the forex market when it comes to technical analysis is that any method that works successfully for a currency pair could also be applicable to others as long as they are traded in the market. Trading currency pairs remains one of the accredited way through which a trader is able to get success in the forex trading business. However, to make profit from trading this currency pairs, a trader does not just open his chart and jump on a trade hoping that it would make some success (the truth is that the trade can end up being in profit, but that was just based on mere coincidence as it counters the proper way through which trades are supposed to be placed). In other to make good trades, the ones called high probability trades, there is constant need of market analysis which serves as the only means of making good market predictions. After a trader might have considered his prediction based on the analysis made, the next thing is to crosscheck with his trading plan and see if his prediction agrees with what has been penned down, this way a person is assured of high probability trades with good returns.

When choosing a new currency pair to trade you must take several steps
At first you should look at sites and forums for someone who is good at analyzing this pair or following the movement of this pair and is known for the success of his deals in this pair
You can continue to analyze it for a while until you know the kind of analysis that this pair respects because in my experience in Forex some currency pairs have great respect for specific instruments of analysis
Also you must understand the news and economic and political events related to each currency in this pair in order to be familiar with the latest news because sometimes you are trading on a new currency pair and there is an economic or political event such as elections or any crisis you do not know about something and this leads to movements incomprehensible if You don’t know the reason
After that, you should see the daily movement of this pair to determine your goals and also capital management

Before we can trade any currency pair in the forex market, there is need for analysis because that is what makes it possible for you to earn money in the forex market, unfortunately someone who is trading regularly and not getting something from the live account will have challenges, there are losses that are especially needed in the forex market because that always it good you make money, analyze and understand the real movement in the charts so that you make decisions that would be reliable without getting something wrong, hence there is nobody that has made tremendous impact on the economy without learning about anything that can increase their trading performance apparently based on the indicator that they are using for the first time in the business.

In forex market we can trade easily here. but to make profit is so much difficult. If we can make good trade according to our own analysis then we can make very well trading in this market. when we trade on a new trading pair we have to trade here like others pair. We need to analysis the chart at first. We need to find out the best position for trading. if we get it then we need candle confirmation. This candle confirmation can give us success in forex business. I suggest all when u trade on a new pair u must have to understand the pair character and then we need to go ahead. Every trader want to secure his capital first and then they need to trade here.

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