Characteristics of the currency pair EURUSD
The Euro / US Dollar is a real hegemon of the financial market in any of its manifestations.
The most liquid pair, uniting the two most powerful world economies - the United States of America and the European Union. The EUR/USD pair accounts for about a third of the financial market turnover.
What you need to know about currency pairs?
Trading in currency pairs on the Forex market is gaining more and more popularity every year. Many have heard about it, but not many are fluent in the skills of using trading instruments. And here the priority is the question of which currency pairs are optimal for trading.
A currency pair is a concept used in the foreign exchange market and characterizes the ratio of exchange rates of currencies of different countries of the world to each other.
Each currency pair has certain distinctive features:
| Volatility | Spread | |
| Prices for a number of currency pairs in the course of one day overcome over a hundred points, while for others it takes a whole week. In the case of rapid price fluctuations, trading is much more active, earnings are formed quickly and easily. Hence the recommendation to start trading with those currency pairs that are characterized by high volatility. This includes almost all containing the dollar index. | It should be noted that its value in pairs containing the dollar index is usually minimal and equal to three points, or even less. In contrast, the spread on other pairs is much higher. Therefore, when preparing to enter the market, you should carefully study the spread for a specific market instrument |
It is difficult to give any clear recommendations regarding the decision to trade several currency pairs or only one. Each trader independently determines his capabilities.
Exchange rates
Exchange rate - the price of a monetary unit of one country, expressed in the monetary unit of another country. The establishment of the exchange rate is called quotation.
Inflation has a particular impact: under its influence, the price of the national currency can both rise and fall.
In turn, any state has every right to regulate the inflow of currency from other states. In the fluctuations in value, policy intervention cannot be ignored: if a country develops steadily, then the influence is almost negligible.
When revolutions occur in a country, a change of power, then here courses can change with catastrophic speed. Because the authorities are unable to control the value of not only the currency, but also many other processes taking place in the country.
The higher the inflation, the lower the rate - of course, if there are no other factors influencing it. The calm situation in the country is always a guarantee that the national currency is in demand not only in the country, but also abroad.
Fixing a national currency in a foreign currency is called a currency quote. It is customary to distinguish between three types of quotes:
| Direct quotation | Reverse quotation | Cross-courses | ||
| The price of foreign currency prevailing in the national foreign exchange market. It shows the amount of the measuring currency per unit of the quoted currency. | Reflects the number of units of the quoted currency per unit of the measuring currency. | The need for such quotes arises in cases where the volume of direct exchange transactions between two currencies is relatively small and, therefore, sufficiently representative direct quotes do not add up. |
When observing the level of the exchange rate, two rates are recorded:
- Seller rate (Ask, offer price);
- Buyer's rate (Bid, ask price).
Trading sessions
Currency exchange takes place on 15 major world exchanges, almost all of them are located in different time zones and therefore the market is open 24 hours a day.
According to their geographical location, the exchanges are divided into four groups:
| Session | Pacific (Sydney) | Asian | European (more often called London) | American (also called New York) | ||||
| Time | from 00:00 to 08:00 | from 02:00 to 11:00 | from 10:00 to 19:00 | from 16:00 to 23:00 | ||||
| Description | It has the weakest trading volatility. This is explained by the small number of traders and the absence of significant economies in this region. | Trades are more lively with low turnover. | The largest trading turnover occurs in this session. Active trading is underway. The release of important economic news strongly excites the market. | The most volatile session. At this time, the market always reacts emotionally to all news from the United States. Market volatility is the greatest. |
It is important for a trader to know what kind of trading session is going on at the moment, and for this he should know the schedule of their opening and closing.
The choice of trading time depends primarily on your strategy and what time frame you are using. For example, if it is 4 hours or more, then naturally, it doesn't matter which trading session is going on at the moment, but if hourly ones are lower, then you need to pay attention to them, as this affects the volatility of the currency pair.
The choice of a trading session is very important in trading, or rather, on the contrary, it is important to know which session is going on at the moment of entering the market. I recommend using third-party services to accurately track the opening of trading sessions.
Trading time intervals
Timeframe is the time interval of the chart that is used to display the quotes of the selected asset.
As for the types of timeframes, they are:
| Minutes | The designation "M" means "minute". | |
| Sentinels | The letter "H" means "hour". | |
| Daytime | Indicated as D1 - one-day timeframes. | |
| Weeks | Designation W1. | |
| Menstruation | Designated as MN1. |
You should choose a timeframe based on a strategy, or from your own experience.
Trading strategy
A trading strategy is a fixed plan that is designed to generate income in the long or short term after entering the market.
The main features of a trading strategy are the ability to test an individual strategy for efficiency, the ability to measure the necessary indicators for the application of the strategy, as well as the consistency and objectivity of the strategy and its elements.
There are three styles of trading strategy, they are closely related to the time intervals of the trade:
| Short-term trading | Medium-term trading | Long-term trading | ||
| Here, all positions are opened and closed during the day, and the total number of transactions is not limited. You can make one deal or a hundred - as long as you can. | A more relaxed trading option. The time of transactions has a long duration (up to several days). Here the psychological load is much lower, because there is no need for constant monitoring of the charts. | This method of trading is called investing. Here you can open a deal and forget about it for several weeks. This option is ideal for those people who do not like to sit near the computer for a long time, but at the same time are eager to earn a lot. |
It is important to remember to become familiar with the strategies and always practice using them. You can't just learn about the strategy and start getting money, it is important to make out all the details and nuances, then you can be sure of success.
Features of the EURUSD currency pair
The Euro / Dollar is considered the most popular pair to trade for a number of reasons:
- High liquidity and, therefore, the profitability of the conclusion of transactions.
- EUR/USD is one of the most technical instruments, its dynamics is predicted by the figures of technical analysis.
- It is also one of the most predictable assets. The countries of the Eurozone, like the United States, regularly publish statistical data on the state of the economy and macroeconomic indicators that affect the exchange rate.
- Lots of derivatives that work with this pair. Transactions with it can be concluded not only on the spot market, but also on binary options, futures, etc.
The greatest influence on this currency pair is exerted by the monetary policy of the US Federal Reserve and the Central Bank of Europe, especially the difference between the interest rates of these organizations affects the quotes of the pair.
In addition, the following fundamental factors can be distinguished:
- Financial statements of large corporations based in the US and Europe;
- Dynamics of commodity and commodity markets;
- Reports on unemployment;
- Geopolitical factors.
In addition, it should be noted that EUR/USD is strongly correlated with another currency pair - GBR/USD, which is taking place against the backdrop of the relationship between the euro and the pound sterling. This means that the display of price movement on the chart of these two pairs will repeat each other.
Working with this pair is quite simple and, most importantly, profitable. Therefore, it is actively used by both innovators who have just come to the market and professionals who, despite their experience, cannot refuse this liquid pair.
How to start trading EURUSD in Kenya?
For trading, you need, first of all, a specialized platform. These are usually provided by online brokers. Its convenience lies in its general availability, as well as with the help of the platform, an investor or a trader can gain access to trading at any time, wherever they are. Even during a trip, vacation or while shopping, you can earn money, since many sites have a mobile application.
To gain access to the exchange market, you must register on the site. This will secure your funds and personal data, and verification will provide additional protection against fraudsters.
Usually the registration process does not take much time, you need to provide a valid email address, and then follow the link from the confirmation letter. It can take no more than 10 minutes, which is very convenient.
After registration, the system offers to choose a practice or real account. For those new to trading, it is important to pay attention to the first option. Since the training account is a full copy of the real one, with the exception of funds that are provided free of charge with the account. This allows a beginner, without losing his personal money due to lack of experience, to familiarize himself with the principles of trading and choose suitable strategies for starting it.
After the investor or trader has fully familiarize himself with all the news, tested all indicators, and also worked out the strategy, he can switch to a real account.
It is important to remember that it is not necessary to start trading with a huge deposit. Many sites provide an opportunity to start with a small amount.
Thus, we can conclude that you can start trading from anywhere in the world, only desire, patience and Internet access are important. The main thing to remember is that in case of failure, you can go back a step and try again, then you will definitely be successful.
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