EUR/USD is a currency that most traded in the world. The currency is categorized as part of the “Majors” and the pair is a representation of the world two biggest economies. The currency pair is the most liquid in for example and is a combination of the U.S. Dollar and Euro.
The Federal Reserve Bank regulates the circulation of the U.S. dollars. The process takes place in the meetings scheduled for the Federal Open Market Committee. The Euro is the biggest reserve and the second most traded currency in the entire world. The official currency of the European Union is the Euro, where France and Germany dominate.
A number of factors have triggered the volatility of the EUR/USD pair. For instance, the Dot Com bubble is a major event. Between 1997 and 2001, there were speculations that interfered with the relationship between EUR and USD. It took many years for stability to be restored.
The other event is the Real estate bubble, which was thought to be the cause of the recession between 2007 and 2009. The recession had a negative effect on the U.S. economy. Finally, the European debt crisis possessed a crucial effect on the relationship between the euro and the U.S. Dollar.
There are various steps to trading EUR/USD. First one needs to check the leverage value which can either be 1:50, 1:100, or 1:200. The next step is choosing the tool of the trade. FX/CFD is a recommended tool of the trade as it enables individuals to trade in the forex market by just a few clicks. The trader is required to log in to the trading account and select the trading platform.
On the platform, one is supposed to choose the asset and click on either Buy or Sell. The other step is selecting the Quantity that is “Stop Loss” and “Take Profit”. To open the position, an individual is required to select between either “Sell” or “Buy”. The trader can monitor the trades and close it anytime one would like.
FX/CFD has unique features that enable the traders to improve the accuracy of the trade decisions. Such great features are the Moving Average, RSI and Bollinger bands. The tool is effective as it allows trading of many assets simultaneously.
There are strategies to be applied when trading EUR/USD. The first one is Buy or Sell the Pullback. EUR/USD currency pair trends tend to fluctuate from time to time. The case takes the price from one point to another causing a positive feedback loop. The loop is associated with considerable momentum.
On the contrary, the swift movement can sometimes lead to the shift of the demand and supply equation. The strategy, therefore, entails the application of the counter-trend movement. The mechanism identifies the essential resistance and support levels appropriate to stop the price swing. Restoration of the direction of the initial trend is also enhanced by the Pullback strategy.
Buy the Breakout or Sell the Breakdown is the other key strategy. The EUR/USD tends to move back and forth when in a closed boundary. The situation leads to the establishment of trading trends and ranges that are appropriately defined. During the named periods, traders make a lot of benefits from low-risk trade entries. The process takes place when the resistance/support levels break away enhancing either a selloff or strong rally. One is advised to have good timing in order to reap more from the trade.
The last strategy is entering the narrow range patterns. The EUR/USD currency pair is involved in the printing of narrow range price bars. The bars are important as they decrease volatility while increasing the levels of apathy. The act provides a good entry signal associated with either breakdown or breakout. The strategy is thus essential as it allows individuals to enter positions using narrow range pattern. The traders are in a position of having a tight stop in situations of major reversals.
The U.S. Dollar has played significant roles thus its growing popularity. The USD is regarded is considered as the reserve currency of the world since it is used to cater for many international transactions. Besides, the majority of small nations tie the value of their currency to that of the USD. Banks around the world also hold a huge portion of the currency reserve in terms of USD.
The other reason is that the Organization of Petroleum Exporting Countries uses the USD to undertake its transactions. On the other hand, the euro also plays key roles. First, the European Union forms the largest part of the economic region. The growth of the euro is attributed to manufacturing and services. The euro is also key since out of the 28 European countries, 19 use the currency.
Best Time to Trade EUR/USD
The forex market is open for five days each week for 24 hours. However, one is advised not to trade anytime. The appropriate time is when there are more volume and transactions taking place. The ideal time is also when the currency pair is active. The advantage of forex day trading is that one can trade for 24 hours a day. for instance, when the business is open for both London and Europe, the currency pairs featuring the euro and British Pound are highly traded.
When day trading with EUR/USD, the volume charts prove that the most active time is when both New York and London are open. The named markets become open at 08:00 and 22:00 GMT. The cost of commissions and spreads can cancel out the profit when one does not trade at the right time. The best time for trading EUR/USD binary options is from 13:00 to 16:00 GMT. The three-hour period is when both New York and London are open. The spreads are tightest during the time due to the volume from the two markets.
The forex forums are alive between 13:00 and 22:00 GMT hence the traders are in a position to see the attractive daily moves. Such a scenario is essential in increasing profits. It is not usually prudent to trade upon every buy sell signal as the situation can sometimes cause losses. The market noise and graph should not tempt one to trade on 12th our in tradable forecasts. The trader should focus on the known and the volume makes the potential moves valid.
In summary, the EUR/USD forex trade is quite a profitable investment. The traders are however required to be keen while undertaking the trading activities. Despite the fact that the trade is open for 24 hours a day for five days a week, the trader should not be tempted to trade the entire time. For instance, the best time to undertake forex day trading is between 08:00 and 22:00 GMT. Besides, the ideal time for trading EUR/USD binary options is between 13:00 and 16:00 GMT. The named periods are ideal since the spreads are tightest because of the volume from both markets. An individual is required to check the leverage levels before trading. FX/CFD is regarded as the best tool due to its efficiency. It is with no doubt that with the essential information, one can hesitate trading in the forex market.