By admiralmarkets.in
A strategy to maximize profit in the foreign exchange industry or forex markets should begin with knowing which currency pairs you should be trading. First, you have to learn that the first currency in a pair is called the base currency and the second is known as the quoted currency. Next, you need to know of the factors that could affect their trading values. As not all factors are equally significant, it is wise to invest your money only based on those factors that can cause a fair impact on global markets.
The 4 Major Pairs
British Pound Sterling (GPB) and US Dollar (USD)
The GBP/USD currency pair, sometimes referred to as Cable, indicates how many US dollars are necessary to buy a British pound. It follows that the British Pound Sterling is valued per US dollar.
US Dollar (USD) and Swiss Franc (CHF)
USD/CHF is defined as the amount of quoted currency needed to purchase the base currency. Swissie, as others call the currency pair, is dependent on the different interest rates of the Swiss National Bank and the Federal Reserve (Fed).
US Dollar (USD) and Japanese Yen (JPY)
Exchanging USD/JPY is alternatively termed as trading Gopher. It suggests how many Japanese Yens are necessary to buy a US dollar.
Euro (EUR) and US Dollar (USD)
EUR/USD is the amount of US dollars required to purchase 1 euro. Exchanging European and American dollars is also known as exchanging Euro.
What Are the Top Factors that Affect the Value of Each Pair?
– Consumer and Producer Index
– Gross Domestic Product
– Retail Sales
– Durable Goods
– Payrolls
In forex, it is known that a currency pair’s value is often related to both countries’ economic growth (both countries that make up the currency pair). If a country’s growth is stable, that country’s currency usually is too and vice versa. Because of the interdependent nature of currency pair trading, it is important to keep each country’s economic situations in the forefront of analysis. In the event when there’s a major change or intervention in a country’s economic outlook, it will immensely affect its currency’s strength and performance.
All in all, currency movement is often thought to be based on the activity of the exchange of products and services or trade balance of a country. If the trade status is positive, it implies that the country’s goods and services are in high demand which can boost a currency while a negative balance means that the market is weak for that country and may be seen through a less demanded currency. Letting this be the basis of what to exchange and when to exchange can often be a factor that could get you more for your capital.
If you wish to be successful in the foreign exchange market, you should take the time to learn about the different currency pairs and their trading characteristics. Discussed above were only the major ones. Especially if you’re planning to be in the business for a long while, you should be familiar with ways you can maximize your profit by analyzing the economics, currency history and unique characteristics of the major country’s of the world. Other than the fact that you’ll be using them extensively, you’ll be getting the best value for your exchanges.
Content Source, www.admiralmarkets.in
