eToro – Forex Trading Forum

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The Major Currency Pairs :-

EUR/USD

The most traded major currency pair is the EUR/USD with around 30% of total daily volume. A great pair for new currency traders because it moves slowly compared to the other major pairs. The EUR/USD tends to trade in opposition to USD/CHF (negative correlation) on the other hand it has a strong positive correlation with GBP/USD.

Your broker should be offering a spread of 2-3 pips and you can expect to trade a range of 90-100 pips during an average day. The European session presents the best opportunity to trade this pair (0700 GMT - 1700 GMT).

A strong USD weakens this pair and when the US Federal Reserve intervenes to weaken the USD, you will see the pair get stronger.

This currency pair is suitable for new traders and popular with experienced traders. It lends itself to Day Trading and Swing Trading.

Apply Technical analysis and follow financial news from the Europe and the US to make your EUR/USD trading decisions. Also, because of their negative correlation it can be useful to compare the EUR/USD and USD/CHF charts when planning trades. Generally, USD/CHF moves ahead of EUR/USD.

Coming soon - the personality of the USD/JPY pair .......

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The Major Currency pairs continued ....

USD/JPY

USD/JPY is the second most traded currency pair with about 20% of total daily volume.

Your broker should be offering a spread of 2-4 pips and you can look to trade a range of 80-90 pips during an average day. The best time to trade this currency pair is during the Asian Session (2400 GMT - 0900 GMT).

Check out the difference between the interest rate of the Bank of Japan and that of the US Federal Reserve. Also note that when the Japanese Government act to strengthen the Yen the USD/JPY currency pair weakens.

As with EUR/USD, this currency pair is suitable for new traders and popular with experienced traders and it lends itself to Day Trading and Swing Trading.

Use Technical Analysis and follow financial news from the Asian financial zone to make USD/JPY trading decisions.

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The major currency pairs continued ….

GBP/USD

GBP/USD is the third most traded currency pair with about 15% of total daily volume. This is notoriously one of the most volatile currency pairs. It can experience many false breakouts and wild movements during the course of a day. This means that it is not suitable for a beginner. Leave GBP/USD to the more experienced traders out there.

Your broker should be quoting a spread of 4-5 pips and, as befits this volatile pair, you can expect to trade arrange of 150-200 pips during an average day. The best time to trade GPB/USD is during the European Session (0700 GMT - 1700 GMT)

As with all currency pairs you will need to check out the interest rate differentials. For this pair check the rates of the Bank of England and the US Federal Reserve. Also note that growth and high productivity in the UK economy drives the GBP/USD upwards.

Beginners beware – this pair is best left to experienced traders and favours Day trading and Swing trading

Use your Technical analysis tools and analyse the Fundamental News from the UK and US zones before making your GBP/USD trading decisions. This pair is prone to false breakouts and surprising economic news releases can make the GBP/USD suddenly more volatile.

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The major currency pairs continued ….

USD/CHF

USD/CHF with about 5% of total daily volume is the least traded pair of the four major currency pairs. This pair tends to be negatively correlated to the EUR/USD.

Brokers offer a spread of 4-5 pips for USD/CHF and the trading range is 120-135 pips on an average day. The best time to trade this pair is during the European Session (0700 GMT - 1700 GMT)

Global stability and global recovery will send USD/CHF higher and the pair rallies when there is a state of geopolitical instability.

USD/CHF is not for beginners – but moderately experienced traders may be able to manage it and advanced traders should be able to profit with this pair. Best trading styles for USD/CHF are Day trading and Swing trading.

Use your Technical and Fundamental analyses – follow news from the European and US areas when making USD/CHF trading decisions.

As mentioned, USD/CHF and EUR/USD have a negative correlation and you can learn a lot by comparing the charts of both these pairs when trying to analyse future trends. Generally speaking, EUR/USD tends to leads any moves ahead of USD/CHF.

[Principe]

Your posts are really useful!

Could you explain us some methods to trade and especially to avoid strong losses.
As beginner, i appreciate very mutch if you explain me also indicators and chart you use usually to trade..

Thx in advance

[ratoloco]

Thank you!

[Tropezienne]

Hello Principe and ratoloco - I’m glad that you found this information interesting. I shall soon be analysing the personalities of the Cross Currencies and the Commodity Pairs in terms of their personalities. So suscribe to this thread if you want to know when those posts are added.

As with the Majors that I dissected above I shall discuss how to trade the Cross Currencies and Commodity Pairs and whether they are suitable for beginners or are only for the more experienced traders.


Principe - it is very satisfying for me that you have been reading my posts and finding them useful. I have to tell you that I consider myself a novice after 9 months as a forex trader. So my articles are written by a novice and aimed at other novices. I’m sure that more experienced traders will find my articles a bit basic.

If you are a complete beginner my advice starts with 3 ’Do Nots ’ which follow on the next post below :

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The 'Do Nots' :

Do not expect to make a lot of money quickly - and don’t believe any so-called’forex Guru’ who tells you that you can !
Do not buy any expensive forex courses or automatic signals.
Do not allow yourself to become obsessed by forex.

As for the ‘Do’s’ :

Do stick with eToro - read their help pages and keep in contact with your eToro account manager.
Do start on the practice account - and treat it as if you are trading with real money.
Do supplement the training that eToro offers - I recommend www.babypips.com - they have a great free forex course.
Do concentrate on one currency pair only (2 at the most) so that you become familiar with what affects that pair.
Do use the eToro ‘Top Trader’s Insight’ - look only at your chosen currency pair.

I am not qualified to teach you to trade, but I shall outline what I do below :

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How I trade :

I trade only USD/EUR and sometimes USD/GBP
I use eToro only
I use the Trade Box in Expert Mode - when I started I experimented with all of the trading interfaces offered by eToro. Now that I have ‘graduated from Complete Beginner to Novice I find that I prefer the Trade Box.
I use the eToro charts - if you do not know how to use them, go to the Help section on the eToro Platform.
I use the eToro news and economic calender and only focus on the évents that relate to my chosen currency pair (USD/EUR)
I Day Trade (I'm not yet confident enough to let a trade go on overnight)

It is important to keep things simple - I’m beginning to realise that forex is not so complicated. Some people out there on the internet would like us to think so - but eToro helps you to keep things in perspective.

If you find yourself getting to stressed, to obsessed or too messed up by your forex activities - go to the ‘Forex and Your Health’ thread elsewhere on this forum. There I try to take both a health-orientated and a fun-orientated look at how to cope with being a forex trader.

The best lesson I’ve learned ? KNOW WHEN TO STOP TRADING.

[Principe]

Thank you, thank you, thank you.
You're fantastic!
I will read always all your posts!

[Tropezienne]

Currency crosses are pairs that do not include the USD, eg: the EUR/JPY is a currency cross. Currency pairs that include the EUR are called euro crosses, eg:the EUR/CHF and the EUR/JPY. Currency pairs that don't include either the USD or the EUR are known as 'cross rates', eg: the NZD/JPY and the GBP/JPY.

One of the most popular trading techniques used by forex traders is known as the carry trade. The goal of the carry trade is to find two countries with vastly different interest rates, and profit by buying the currency of one and selling the currency of the other. This trade is popular precisely because it is safe and somewhat predictable.

Carry traders love the yen crosses due to the low JPY interest rate. A popular currency cross for carry trades is the NZD/JPY because of the great interest rate differential.

The most Popular Currency Crosses include:

EUR/JPY
EUR/GBP
EUR/CHF
NZD/JPY
GBP/JPY

These are the crosses that I shall discuss here.

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EUR/JPY

The EUR/JPY cross rate produces a high volume of trades. It is affected by the movements of EUR/USD and USD/JPY. The price movements of this pair are mainly based on interest rates and growth differentials between the Euro zone and Japan.

Your broker should be offering a spread of between 3 and 5 pips and you can expect to trade an average daily range of between 95 and 115 pips.

This pair is affected by the difference in interest rates between the European Bank(ECB) and the Bank of Japan (BoJ), by economic growth differentials between the Euro and Japanese zones, by oil prices because Japan imports 99% of its oil and by European and Japanese economic data.

If you want to trade the EUR/JPY you need to apply Technical Analysis and to read the Fundamental News from the Euro and Japanese zones before making trading decisions. The health of the Japanese economy versus the European economy is the most important factor for the trader of the EUR/JPY.

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EUR/GBP

The second largest trading partner of the United Kingdom is the so-called 'Euro Zone'. This makes trading the EUR/GBP a perfect pair to trade by using the Fundamental Analysis because it is less affected that the GBP/USD by market sentiment.

Your broker should be offering a spread of between 2 and 3 pips and you can expect to trade a range of between 25 and 50 pips during an average trading day.

The EUR/GBP is affected by the difference between the interest rates of the European Bank(ECB) and the Bank of England(BoE), by European and UK economic data and by the growth differentials between the Euro Zone and the UK.

You need to use both Technical Analysis and Fundamental Analysis to trade this pair. Be aware of the economic news from both the Euro Zone and the UK market.

The good news for novice traders is that this pair is excellent for you because it has a low and manageable volatility.

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EUR/CHF

The main trading partner for the Swiss Zone is the Euro Zone. The EUR/CHF is a very good cross currency pair for carry traders because of the low CHF interest rate and especially if the overall technical and fundamental outlook supports an appreciation of the EUR/CHF.

Your broker will offer you a spread of between 3 to 5 pips and you can expect to trade an average daily range of between 35 to 48 pips.

This pair is affected by the difference between the interest rates of European Bank(ECB) and the Swiss National Bank (SNB) and by the Swiss and Euro Zone fundamentals.

Use your Technical Analysis and Fundamental Analysis tools paying special attention to the economic news from the Euro Zone and the Swiss zone. As noted, this pair is good for carry trades because we have a high interest currency (EUR) against a low yielding one (CHF). Traders can earn good interest fees if they hold this pair long.

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NZD/JPY

This is usually another great cross pair for carry traders because of the interest rate differential between the NZD and the JPY and is therefore an attractive cross currency pair to long for carry traders when the overall technical and fundamental outlook supports an appreciation of NZD/JPY.

Your broker should offer you a spread of between 7 to 10 pips for this cross pair and you can expect to trade a range of 50 – 90 pips on an average trading day.

NZD/JPY is affected by the interest rate differential between the Reserve Bank of New Zealand and the Bank of Japan and by New Zealand and Japanese zone fundamentals.

You need to apply Technical and Fundamental before making your trading decisions for this pair. Watch the Fundamental News from both the New Zealand and Japanese zones.

Carry traders can earn attractive daily interest fees while holding this pair long.