Showing posts with label 6. Currency Behaviour. Show all posts
Showing posts with label 6. Currency Behaviour. Show all posts

Tuesday, March 17, 2009

Trading behaviour of USD/CHF

USD/CHF is often said to be a safe-haven currency pair. When unexpected geopolitical news hits, USD/CHF usually reacts the fastest and farthest. However, those markets reactions are increasingly short-lived, usually minutes to hours before the preexisting trends continue.

Switzerland conducts the 80% shares of its foreign trade with the Eurozone and remaining EU countries. The Swiss National Bank only gets involve in the forex market either Swiss franc is too strong or too weak against the Euro.

3 points to take note on trading USD/CHF:
  • Price actions tends to see one-way traffic in highly directional markets.
  • False breaks of technical levels occur frequently.
  • Spike reversal are very common.
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Tuesday, March 10, 2009

Trading behaviour of GBP/USD

Trading GBP/USD presents its own set of challenges.This is because, the pair is prone to sharp price movements and chaotic price actions. Well, this is what most speculators love. When you get into the right wave direction you'll be rewarded quick and huge.

The UK economy is the second largest national economy in the Europe after Germany. The pound is heavily influenced by cross border trade and mergers and acquisitions activity between UK and continental Europe. Two-thirds of UK foreign trade is conducted with EU members states, making the EUR/GBP cross one of the most important trade-driven cross rates.

GBP/USD moves is similar to EURUSD. However, GBP/USD price movement exhibits more abrupt volatility and more overall extreme overall price movement. For example, if better than expected data released, GBP/USD price movements would double EUR/USD price movements.

3 points to take note on trading GBP/USD:

  • Price actions tends to see one-way traffic in highly directional markets.
  • False breaks of technical levels occur frequently.
  • Spike reversal are very common.
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Tuesday, March 3, 2009

Trading behaviour of USD/JPY

USD/JPY is the most politically sensitive currency pair among the majors. Japan is 40% export-oriented economy. Japanese officials will get involve to keep JPY from strengthening beyond desired levels when needed. Weaker JPY makes a nation's exports cheaper to foreigners.

USD/JPY can be either active directionally or consolidating. As such, we like to approach USD/JPY on a hit and run basis.

4 ways to spot for trading opportunities :
  • USD/JPY tends to respect the technical levels with less false breakout.
  • USD/JPY price actions are usually highly directional on breaks of technical support and resistant.
  • Spike reversals from technical levels are relatively common.
  • Orders frequently define intraday highs and lows and reversal points.
  • Japanese candlesticks

Can you spot more ?

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Tuesday, February 24, 2009

Trading behaviour of EUR/USD

The deep liquidity and tight trading spreads in EUR/USD make the pair ideal for both shorter-term traders and longer-term traders. During normal market conditions, EUR/USD tends to trade tick by tick, as opposed to other currency pairs. Less liquid currency pair, like GBP/USD, typically fluctuate in a far jumpier fashion, which is reflected by the wider price spread.

When you spot EUR/USD is heading to its support or resistant level do not jump in to trade. This currency pair tends to move and pull back in a nice fashion. If you are planning to sell wait for the pull back to sell to gain more pips.When it comes to trading around the technical support and resistant levels, EUR/USD can try the patience of even the most disciplined traders. This currency pair will linger around from minutes to hours around the support and and resistant levels.
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Tuesday, January 13, 2009

Which currency pairs gives the best yield?

The 4 majors - EURUSD, GBPUSD, USDJPY and USDCHF are the most traded currency pairs. They are the most liquid and active pairs. However, there are some that trades only a currency pair. Each forex trader has different risk appetite and trading style. It's best to learn a currency pair 'behaviour' at a time than trade on all currency pairs.

There are some that just trade on the crosses such as GBPJPY,AUDJPY etc. I love GBPJPY, one of my favourite, and traded it with 1 hour time frame. It gives me the freedom to do other things and I need not glue to the screen too. Furthermore, shorter time frame is very volatile too. Basically, I draw trend lines, support and resistant lines - very important. Follow that I use Stochastic and RSI - just a guide only. Cut loss is 100pips. Profit is 100pips or more.

I know conventional talk will give a thumb down to my trading style - risk/reward ratio etc. Yes, if you do what majority do, you sure get what everyone else gets. GBPJPY is a unique currency pair whereby it swings high and low before it gets to your target. If you set a cut loss of 50pips or less, chances of being stop out 1st before you get your profits is high. How many times a forex traders got stop out before arriving to his target? At the end of the day it's more important to have a constant profit flowing in.

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