Forex Trading Strategies
Understanding the Currency Pairs in Forex Market
There are many concepts you need to understand to make money in Forex. One of them is the concept of currency pairs. All the trades that are placed here are for making a profit and if you do not know the right pair for your investment, you will lose the money. There are many types of pairs and each pair has their advantage and disadvantage. This article will give you an idea of the currency pairs and also try to answer if the major currency pairs can bring more money to traders. It is commonly believed among them that if they can trade with a popular currency, it will give them more volatility and they will have chances to make more money. This article will try to explain if that really happens in Forex.
The basic structure of the Forex market
Before you start your journey you need to understand the basic structure of the Forex market. First of all, learn about the technical factors so that you can find decent trade setups in the higher time frame. But understanding the technical factors is not enough. Fundamental analysis is the second most important type of market analysis and you need to use the fundamental data to analyze the strength of the market trend.
Once you have mastered the two major types of market analysis, it’s time for you to start using the demo trading account. Consider the demo trading platform as blessings since you can easily develop your trading skills without losing any real money. Being a new UK trader, you should focus on the major pairs only. Some traders often prefer cross pair trading but this is extremely risky. Most of the time, wild spikes and random movement in the price are more prominent in the cross pairs. So it’s a must to develop a clear idea about the currency pairs to develop your skills.
The major pairs
The most popular pairs in Forex are the major currency pairs that have been paired with the US dollars. A popular example of this major part is the EURUSD, the most traded pair in Forex. It is also because it offers the most liquidity. The easy way to know if a pair is a major is by looking at the other currency that it is paired with, if there is no US dollar, it is not a major currency pair. Most traders trade with the major pairs as they are traded all over the industry. You will find also much information because they are popular.
The minor currency pairs
If the pair has no US dollar in it, it is a minor currency pair. They are less trade than the majors because they are less popular. One of the reasons is dollar is the most widely accepted currency in the world. Their price is always stable and it gives the trader the chance to make money with volatility. The minor currency pair does not have a dollar and the prices change. It makes the trends volatile and the traders do not get the profit as they have planned.
Are major more profitable than minors?
This question makes sense when we look at the chart. Most of the traders like to wait for a trend that appears with a major pair. They know the pair is combined with the dollar and it makes it stable in volatility. This gives them hope and increases the confidence that they can make money. They can be profitable as there is more information online and you can know about them, you can understand them easily but that will not help you to bring profit if you do not plan a good strategy. Even traders with minor currency pairs can make a profit with a good plan. Leave this thought out of your mind and you will find there are more ways to make money than by trading with major pairs.