MORRIS COUNTY — Binary options offer a variety of assets to trade. Among those, currencies are one of the highest-traded assets all over the world. There are a variety of currencies you could base your trade upon. However, the EUR/USD currency pair is the most prominent and renowned currency.
The EUR/USD currency pair is the most traded on almost every trading platform due to its high liquidity and tight spread. It is also one of the most popular assets on www.binaryoptions.com. Despite its popularity, many traders are still afraid and intimidated to trade in this currency pair. This is why, in this article, we will be helping you with the ins and outs of the EUR/USD currency pair so that you may find it a bit easier to trade this asset.
How to Trade Eur/USD Currency Pairs?
EUR/USD is the short form of euro against the US dollar or the trade of currencies between the European Nations and the USA. The euro is the base currency, whereas the US dollar is the quoted currency. Trading across these currencies occurs in a system where a certain amount of dollars is required to purchase 1 euro. For example, if the currency pair is trading against 1.35, then $1.35 is required to purchase one euro.
When trading the EUR/USD currency pair, you will come across two types of price lists given by the broker. The first is the asking price, which is the amount of money you can buy the currency pair for. The second is the “bid price,” which is the price for which you will be selling your currency pair. The difference between these two prices is known as the “spread.”
The quote of the currency pair is measured in pips. One pip is equivalent to the quoted spread times 0.0001. For example, if the bid is 1.21246 and the ask is 1.21255, then the spread will be 0.9 pips. You must remember this when trading as for you to win, the spread will have to move by at least 0.9 pips.
Why Should You Trade the Eur/USD Currency Pair?
The EUR/USD currency pair is among the most popular trading currencies in the forex market. This is due to several reasons. The first is that these currencies come from very strong economic powerhouses. The US dollar is the national currency of the USA and holds an important value in 10 territories like Panama, Ecuador, and East Timor.
Similarly, the euro is the national currency of 20 countries out of the 27 in the European Union. Also, this currency is legal tender in many other places in Europe, like San Marino, Andorra, the Vatican City, and more.
To add on, the Euro and the US dollar, along with a few other currencies, serve as the international reserve currencies. This means that banks all over the world hold these currencies as a part of their foreign exchange reserves (forex). However, to break it down, there are three main reasons why trading the EUR/USD is beneficial for traders.
- Market Movements: The exchange rates for this currency pair are constantly evolving due to a number of different factors such as investor sentiment, economic data releases, central bank policy announcements, and more.
- Liquidity: As this currency pair is one of the highest traded all around the world, it allows its traders to easily get in and out of their positions, resulting in high liquidity.
- Trading hours: As this currency pair is a part of forex, this means that it can be traded 24 hours a day. However, at certain times the liquidity of the pair will be much higher than at other times at which trading it will be the most beneficial for the trader.
Strategies That Could Be Used While Trading Eur/USD Currency Pair
Being the most popular forex asset in the world of digital trading, there sure is a lot of competition when it comes to trading the EUR/USD currency pair. However, with perseverance, commitment, diligence, and patience, you can surely devise a strategy that will help you gain the most amount of profits.
You can use many types of strategies when it comes to trading the EUR/USD, like fundamental and technical analysis, or both. The kind of strategy you use would depend on your preferred approach toward trading, risk tolerance, and experience. However, for your ease,
I have listed below a few trading strategies that you could use to master your game at forex.
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News Trading Strategy
This is one of the easiest strategies to use, as all you have to do is keep an eye on recent events, most notably regarding economic readings and bank announcements that affect the euro or the dollar. This will help you decide when to buy or sell your currency pair.
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Follow the Trend
Following the current price trends of the EUR/USD using technical analysis and various tools such as oscillators, trend lines, chart patterns, and more to identify the market’s momentum. After identifying the direction of the market, the traders tend to make decisions based on it.
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Day Trading
In this type of strategy, a trader makes a guess about an asset like the EUR/USD forex pair based on how volatile exchange rates are in the short term. Then, they use a wide range of technical and fundamental analysis tools to open and close the position within a day. This type of trading is usually good for traders who want to use fast-paced products to get more experience.
If you still have some questions about EUR/USD currency pair trading strategies, you can get all your answers in this comprehensive guide.
Conclusion
The EUR/USD currency pair is the most-traded foreign exchange pair because it is easy to access, has a lot of volatility, has strong liquidity, and can be traded at any time. However, earning success when trading this currency pair will only come when there’s the right approach, timing, and strategy. When trading this currency pair, half of your success depends on choosing the right timing and keeping an eye on the current news events affecting these currencies.
