What Are Forex Pairs?
Currency trading can be rather complicated for the beginner trader, with all the tricks and cons and indicators and moving averages. If you know a bit about forex trading though, the task becomes much simpler. In this article we will explain the basics of forex trading and try to make it easier for you to start trading your own currency.
So, what are these currency pairs anyway? The most common currency pairs for forex traders are the EURUSD (een overseas currencies), the GBPUSD (in pounds sterling), the USDCHF (U.S. dollar) and the NZDUSD (New Zealand dollar). The best time of day to trade these for pairs depends on which international countries are open for business; at certain times of the day trading is most active. For simplicity, the people who are going to get the most out of this article are going to look at the peak times to trade popular currency pairs, including the EURUSD (een overseas currencies), GBPUSD (in pounds sterling), the USDCHF (U.S. dollar) and the NZDUSD (new Zealand dollar).
First we have the EURUSD (in foreign currencies), this is a commonly used pair and possibly the most widely traded one. This is mainly due to its potential growth as a safe haven during times when the other European currency pairs face problems (i.e. a possible recession in the eurozone, or perhaps the banking crisis in the UK and US). As a result, the EURUSD is a very strong currency pair that would benefit from any weakness in the other currencies. Traders therefore tend to avoid the EURUSD at its lows; instead they are most comfortable waiting until the highs are encountered.
The second currency pair we are going to look at is the GBPUSD (uk pounds pound Sterling). This currency pair is currently strong in relation to the euro, but it is far from being a sure bet. On the one hand, the ghp (sterling pound) is currently far lower in terms of price than the euro. On the other hand, the U.K. (GBPUSD) is currently weak in the market as well, so it would be unwise to make large bets with this pair. Although it is a more traditional investment vehicle, the gurus here is less liquid (due to low liquidity) than its euro counterpart, so it is best to play it safe and avoid taking huge risks.
One more pair that would benefit from some analysis is the NZDUSD (new Zealand dollar). This is a very interesting currency pair, especially considering that it is not correlated with any other currencies. The gurus here is likely to be affected by changes in the U.S. dollar, as this country’s interest rates are quite favorable for foreign investors. This makes buying NZDUSD a very good long-term move. If the gbpusd continues to rise, then this could be a very good move in the markets.
There is one other type of major currency pairs major forex pairs which should also be considered: the USD/JPY (yen) and the AUDUSD (jpy). These two currency pairs have the highest volatility, but they are also not correlated with any other currencies. They are considered safer than the GBPUSD and the NZDUSD (for now), so they might be a good place to start when you are new to trading these pairs.
Finally, let us now look at another quote currency pair which features a strong Eurasian presence. This is the EURUSD (EUR), the currency of many European Union countries, and the third largest economy in the world after the U.S. and Japan. The EURUSD (eur) trades more frequently and heavily than any other currency pair on the market. The recent increase in the euro EURUSD pair has triggered a strong reaction in the other major pairs of currencies. If the EURUSD eur war continues, this could become a very important trading point.
This concludes our discussion on major forex pairs. In the next part we will examine the impact of the European Central Bank (ECB) on the gurus. We will also see how the recent reports from the Comptroller and Regulation Services (CDS) could affect this highly volatile market. If you are new to forex trading, this will be an excellent part I introducing you to forex trading. You can also read my blogs about this topic at this site.