If you are starting and learning how to trade and wonder how to determine which pair of currencies is best for you to commerce, you want to read this article. We will explain some of the key points you need to be aware during the selection of trading currencies, such as broadcasting, when active and the potential for benefits. Once you have finished reading this article, you will be able to avoid choosing a currency that you can have thought is good for commerce, but looking more closely, you will find not the greatest potential for benefits.
You may think that the choice of real currency in commerce is a simple question after deciding to learn forex trade. Some people will naturally choose the currency they feel more comfortable, which is often that of their own country. For example, if you live in Australia, you can start trading the Australian dollar. It is important, however, to know the factors that make an attractive currency for commerce.
The first factor to consider is propagation. The gap is the difference between the purchase price and the price of selling a currency. For example, if you are looking for USD propagation / EUR US dollar / euro, the purchase price of a euro in March 2009 is close to USD1.36485. If you want to sell one euro you will get 1,36470. This difference is propagation, and this means that for profit, you will need the currency to move in the right direction, and beyond the propagation. The USD / EUR Currency pair has what is called a “tight” gap, which means that propagation is low. If we look at another currency pair, such as the US dollar and Thai baht USD / THB, purchase and selling prices are 35,295 / 35.395, a much more important gap than USD / EUR. In this case, you will need to make a much wider movement, just to cover the cost of buying and selling.
When is the active currency?
Currency pairs are active at different times. Although the foreign exchange market is open 24 hours a day, negotiation is generally done in three trading sessions. On the scholarship day opened the Asian session, then the European sessions opens up to the negotiation centered in London and, finally, the U.S session opens with traders in New York. A pair of currencies such as the Australian Dollar / Yen Japanese AUD / JPY is generally more active in the Asian and quieter session at the U.S session. The USD / EUR is the most active in the European and American sessions overlapping.
Does the currency movement?
To take advantage of Forex Trading, the currency pair must move. It does not matter if it moves up or down, it needs to move for you to make a profit. Some currencies may have greater potential to move than others. For example, during the period from July 2008 to March 2009, the USD / THB went from about 33 baht to USD to 35 baht. It’s a movement of less than 10%. On the other hand, the USD / EUR currency pair increased from 1.61 euro to the dollar in July 2008 to 1.26 euro. It is a movement of about 25% compared to the same period.
Now you have to understand that this is not a matter of simple to choose a currency on trade. Forex Trading’s goal is to make profits, and that only one is possible if one considers the diffusion, trade when the currency is active and has a certain movement.