Good day. Each currency pair has its own specific behavior and movement, as well as its own nuances, which are recognized and understood by traders with sufficient experience in trading in the market. In fact, by focusing on trading currencies that the trader knows quite well, one can gain a significant trading advantage.
Beginners, having just opened the terminal, either do not see anything except EURUSD, or trade ALL available pairs. I propose to briefly go over the most famous pairs and note their characteristics. And at the end we will conclude what a beginner should take into trading.
In some ways, knowing the characteristics of the instrument you are trading in more detail gives you an advantage. Thus, if you are interested in learning more information regarding the “mini-secrets” of pairs and currencies, then this article is for you. Below you will find a list of the general characteristics of the movement or behavior of currency pairs that I have noted.
This list is far from complete! Therefore, please feel free to share your experiences and thoughts regarding these characteristics by leaving your comments on this article!
Currency pair EURUSD
It is no secret that the EURUSD currency pair attracts the most trading volume in the foreign exchange market and is therefore the most frequently traded pair with low spreads. Among other observations I noted the following:
▪ The movement of the EURUSD currency pair is strongly influenced by news events such as NFP, FOMC, economic difficulties in the eurozone.
▪ Most of the movement of this currency pair occurs during the London session, but usually the pair does not show large movements during the day.
▪ The pair is trading in the average daily price range.
▪ I noticed that the EURUSD currency pair moves in one direction most of the trading day, and that it often favors deeper Fibonacci levels.
Despite the fact that everyone is immediately jumping on the Eurodollar, I would advise starting with GBPUSD, where the movements are more pronounced.
Paired currencies
Obviously, all currencies are traded in pairs. Wherein:
- the first currency is called the base currency ;
- second quoted .
To avoid confusion, the order in them is always the same, so the pair is displayed as EUR/USD, not USD/EUR. Their correct order is regulated by the international organization ISO (International Organization of Standardization) in standard number 4217. This is a serious company, so don’t anger it or get confused. It’s just important to remember that all brokers will have standard pairings.
The currency pair quote reads as follows:
In Forex, everything is somewhat more complicated. As we already learned in the lesson about binary options and forex, in currency trading there are always 2 prices, because there is a buyer and a seller.
The buyer wants to buy cheaper, the seller wants to sell more expensive. Therefore, in Forex there are always two prices: sales (bid) and purchases (ask). Plus the difference between them (spread).
In binary, everything is simpler, since prices on the platform are displayed using the formula bid + ask/2, so we don’t have to bother with spreads and bids/asks. We will always see only 1 price from a binary broker.
Currency pair GBPUSD
The GBPUSD currency pair likes to display spikes up and down on the chart and is well known for its volatility and large moves. Among other observations I noted the following:
▪ The pound shows the greatest movement during the London session;
▪ During the opening of the London session, the pound likes to show spikes directed up and down, at this time false breakouts often occur;
▪ The price likes to break through the support and resistance line, placing stops;
▪ GBPUSD often retraces to deeper Fibonacci levels such as 78.6 and 88.2;
▪ The daily range of price movement is usually quite high;
▪ This pair likes to spike against the trend, and in these cases it is more attractive for trading against momentum;
▪ There are often news events on GBP that have a significant impact on this currency pair, but after the release of such news the market may remain calm;
▪ This currency pair is strongly influenced by news events such as NFP, FOMC, in short, the same news that affects EURUSD
▪ I noticed that the beginning of reversals usually occurs with a saw, with corrections in price movement and not immediately.
Concepts and terminology of Forex quotes
Trading success is not only knowledge of the basic terminology, but also an understanding of the mechanism by which these concepts are formed, the correct organization of work and the choice of a competent strategy, based on knowledge of the features of asset construction, including correlation.
The key participants in market relations with the highest turnover indicators that are found in the bundles under consideration are presented:
- single European currency (EUR);
- American dollar (USD);
- Japanese yen (JPY);
- Australian dollar (AUD);
- British pound (GBP);
- Canadian dollar (CAD);
- New Zealand dollar (NZD);
- Swiss franc (CHF).
The index of key participants in trade turnover in the bundles under consideration is represented by the absolutely real value of assets, but expressed not in the usual monetary equivalent, but in the form of special points.
Currency pair USDJPY
USDJPY is another currency pair that is heavily influenced by major news events regarding the US dollar. Among other observations I noted the following:
▪ When the USDJPY pair is in consolidation, it slows down its movement extremely much and usually trades in a very small range;
▪ When USDJPY is in a strong trend, it tends to follow that trend without major pullbacks. This helps its trend continue, sometimes showing pauses during which a small bearish or bullish flag is formed;
▪ In a trend, typical Fibonacci levels for USDJPY are levels 23.6 and 38.2.
GBP/USD
This pair is one of the top three in terms of liquidity. It accounts for 12% of all Forex transactions. It has unstable quotes. Because of this, it is in demand among traders who use short-term trading. Quotes depend on events in the English economy. Here the main currency is the dollar, and the quoted currency is the British pound. Changes in quotes directly depend on the actions of the US and UK governments.
This pair is technical and is characterized by false breakouts of important levels, which once again proves the unpredictability of quote dynamics.
Reading: Forex market training
Currency pair AUD/USD
The AUDUSD currency pair is the opposite of the GBPJPY or GBPUSD pairs as it moves at a slower rate. Among other observations I noted the following:
▪ The price will continue to be pushed in one direction, but on its way it will often encounter pullbacks, after which the trend will continue again;
▪ News events affecting the Aussie often have a large impact on all currency pairs associated with the Aussie;
▪ The AUDUSD pair, which shows quite a large movement during the Asian session, also shows a significant movement during the London and New York sessions;
▪ The Australian is heavily linked to commodities, Australian exports and China economic data (such as imports, exports and manufacturing);
▪ We discussed this pair in more detail in a separate video.
CAD/JPY
This pair does not contain the US dollar, it is slightly inferior to the main pairs, but it is popular due to the peculiarities of exchange rate formation. The dollar (Canada)/yen (Japan) pair has a high level of volatility, which is typical for all pairs that include the Japanese yen. Here the main currency is the dollar (Canada), and the quoted currency is the yen (Japan). Quotes are influenced by many factors, the main ones being the policy of the Japanese central bank and the economic situation in Japan and Canada. The Japanese Bank's interventions are aimed at weakening the yen against other world currencies.
Currency pair EURJPY
Key observations for this currency pair:
▪ The EURJPY pair also shows large movements: more than the USDJPY pair, but less than the GBPJPY pair;
▪ It is most suitable for traders of all types of trading, that is, it is universal;
▪ The EURJPY pair often displays chart patterns such as bearish and bullish flags.
GBP/CHF
This pair is among the watchdogs of Forex. Competition between these two currencies began even before the creation of the euro. Switzerland is the largest center of the world banking system. There are a large number of banks in this country; according to calculations, there is 1 financial instrument per 1000 people.
Any trading on cross rates is associated with an increase in the spread, due to the fact that in addition to the main currencies, the dollar takes part in the calculation, with the help of which the quotes are obtained. The value of this pair is calculated using the following formula: GBP/USD*USD/CHF.
The most optimal time for trading on this pair is between 11 and 19 hours, since this is when the London Stock Exchange operates. The Asian and American stock exchanges operate at night, which is why this pair shows little activity at this time.
Currency pair GBPJPY
Key observations for this currency pair:
▪ The GBPJPY pair shows strong movements and has maximum volatility;
▪ In fact, GBPJPY is probably the most volatile pair with the biggest moves, earning it the name "Ferrari" due to its speed;
▪ New traders are not recommended to trade this currency pair.
EUR/GBP
The EUR/GBP pair is preferable for beginners, due to the fact that there are no sharp price jumps, and this allows traders to make informed decisions. Here the main currency is the euro, and the quoted currency is the British pound. Quotes are influenced by the following factors:
- Macroeconomic.
- Political.
- Natural.
Currency pair USDRUB
Due to the fact that we still live in Russia (at least the majority of readers of this site), many are trying to trade this pair in one way or another. What you need to know:
- USDRUB very much depends on fundamental factors, such as the price of oil, the general situation of the Russian economy, etc.
- Commissions and spreads for this pair vary depending on the state of the economy. Often huge
- Very high percentage of speculative transactions
- The tool is not for beginners.
Trading sessions
Another important aspect you need to take into account in order for assets to start bringing you profit is to know what time is best to trade. The earth is round and time is divided into time zones. You can work on the Forex market around the clock, five days a week, precisely for the reason that in one part of the globe the exchanges are closed, and in another they are open.
There are 4 trading sessions: Pacific, Asian, European and Asian.
The most violent ones are European and American. And the highest volatility will be precisely at the intersection of these sessions.
So what should a beginner trade?
I would advise a beginning Forex trader not to take more than 2-3 pairs at a time. Imagine that you came to study to become a doctor and you need to choose a specialty. You can’t be a dentist, a therapist, and a gynecologist at the same time, right? Specialization makes the difference.
If you give a specific set, then take GBPUSD, USDCHF and USDJPY. These three pairs will allow technical analysis to test and feel that each pair has its own characteristics, as well as observe trend movements.
PS You can add your thoughts, comments, tips, considerations and much more at the bottom of this post.
Best regards, Pavel Vlasov TradeLikeaPro.ru
USD/HKD
This pair falls into the exotic category. It is most active during the Asian session. The price of a pip here is 0.0001 HKD. The spread is usually 15 pips. Hong Kong is on the list of the world's largest financial centers, which explains the demand for this couple. Hong Kong constantly attracts foreign investors, which ensures the stability of the Hong Kong dollar.
AUD/USD
This pair is perfect for Forex beginners. According to experts, the Australian dollar is an agricultural currency, so it is dependent on the current yield. In addition, speculative operations have a significant impact on exchange rate changes. The Bank of Australia has maintained a high interest rate for 10 years, which allows traders who engage in long-term trading to earn money.
