Currency Pairs | Learn how to trade them efficiently

Currency pairs

Currency Pairs

Currency Pairs

If you’re at all familiar with the binary options industry, you will know that brokers always have several types of assets to offer to their potential clients. Various commodities, indices and stocks are often a part of the line-up, but what we want to explore here are currency pairs. They often fluctuate very much on regular basis and form a very vibrant market, so it’s always good to know at least the basics about them. This is what our experts are going to show you in this article. Stay with us and build a solid basis upon which you can then build your trading career. Preparation is vital to any trader’s success, so let’s get started!

Currency pairs | Types

When talking about currency pairs, the first thing we have to distinguish is the difference between two main types – majors and crosses. Majors are the most traded pairs on the market and all of them include the US dollar. Therefore, the majors include: AUD/USD, USD/JPY, GBP/USD, EUR/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD. Crosses, on the other hand do not include the USD. They were developed to get around converting one currency to USD dollars before converting them to another. So, EUR/GBP or CAD/JPY, for example, are good examples of that. However, crosses can also be divided into two categories: major (EUR/CHF, EUR/GBP, EUR/JPY…) and minor crosses (AUD/CHF, CAD/CHF, EUR/CAD…). This again depends on how much these currency pairs are popular and traded.

Currency pairs | How to trade them?

First of all, you need to be aware that the majors exhibit very high liquidity because they are the most commonly traded pairs in the world. As a consequence of that, crosses spend more time in ranges and travel much quicker when a break-out occurs. Additionally, crosses are the type of asset most people trade with if they’re looking to trade in short time frames. Boundary and one touch options are usually the modes chosen for this. A useful information is the fact that Corrective Waves take much more to stabilize when an impulsive move of a cross pair happens, while the major pairs stabilize relatively quickly. All in all, there are notable differences between all types of currency pairs, so choose carefully before you invest. There is a lot to take into consideration.

Currency pairs | Conclusion

Currency pairs belong to the most commonly traded assets in the world. There are several types of them and these divisions are based on the pairs’ popularity. Depending on how traded a pair is, it will exhibit different characteristics on the market, so don’t go in this type of trading blindly. Learning about these financial instruments can help you and increase your chances a lot. Also, be sure to check a broker’s offer in this respect, see if they offer the type of pairs that suits you and only then open your account with them.     

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FURTHER READING:

1. A Random Walk Down Wall Street (B. Malkiel, 1999)
2. One Good Trade: Inside The Highly Competitive World Of Proprietary Trading (M. Bellafiore, 2010)
3. Encyclopedia of Chart Patterns (T. Bulkowski, 2005)
4. The Investment Checklist: The Art Of In-Depth Research (M. Shearn, 2012)
5. Moats: The Competitive Advantages Of Buffet & Munger Businesses (B. Labitan, 2012)

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