Even though technical analysis has been proven to be very effective in currency trading, you should take note as a new trader that there are specific tools that are effective for trading certain currencies and it’s up to you as an individual trader to find out which tools work best for your desired currency pairs for trading in order to generate profits. Every successful currency trader knows that for instance the USD/EUR and USD/CHF has different trading patterns and characteristics.
The euro/dollar is the most sought after currency pair in the markets, generating about 28 percent of the total volume of trade across the world due to the fact that the two currencies are very attractive to many traders. All-European currency pairings such as GBP/EUR and EUR/CHF also adds to the attractiveness of the euro-dollar pairing and makes it very attractive to short sellers in the markets.
Technical analysis indicators such as oscillators are well placed to enhance trading of the euro but time periods should be extended to account for delays in the price movements of the EUR/USD. Other Indicators such as the Moving Average Convergence Divergence as well as the Directional Movement Indicator are very useful when trading the EUR/USD.
The second most sought after currency pair in the markets is the USD/JPY, which generates about 17 percent of the total volume of trades in the markets across the world. This currency has been influenced by US-Japan politics throughout the years and even though China is the biggest economy in Asia now, the power of the USD/JPY in that region still prevails. Many traders rely on trendlines when doing business with USD/JPY due to the fact that it generates the least number of fake trendlines in the markets.
The two major currency pairs that are least sought after in the markets is USD/CHF and GBP/USD due to the fact that many traders find it difficult engaging in transactions with these currencies with the technical analysis model, thus making them very risky to deal in for many traders. The reason why the Swiss currency is highly regarded in the markets is because of its political stability and the fact that many investors across the world save their funds in that country. The most vital factor that is highly vital to the Swiss National Bank is the value of the franc against the euro as the EU is the country’s main trading partner.
Traders should therefore take their time to come out with different technical analysis strategies for different currencies in order to reduce risk and generates profits.
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