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Trading currencies is a complicated process demanding good information and perfect understanding of how the Forex market works. ForexExperts.net is a specialized Forex Trading Website offering educational and other resources for world currency traders.

  • Forex Trading Tips, Trade Strategies, and other Learning Resources
  • Detailed Forex Broker Reviews
  • Forex Broker Ratings, powered by the Revolutionary Forex RatingFormula 5.0
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Introduction to Forex Trading

The Foreign Exchange market is the largest financial market in the world with 4 trillion USD daily turnover.

  • Find general information about the Foreign Exchange Market
  • Learn about the most traded Forex Pairs

Learn the basics of the Forex Market: » The Forex Majors | » The Forex Minors or Crosses

Learn about Forex Trading Platforms: » MetaTrader4 Keyboard Shortcuts


 

Forex Trade Tips and other Learning Resources

Alternative Trading System (ATS)There are thousands of economic, and other, variables affecting Forex currencies (interest rates, unemployment, inflation, central bank policies, etc.). The most important task for a Forex trader is to focus on what is currently important and to ignore everything else. Currencies move in mid-term circles, and every circle includes several phases.

For example, technical analysis is important in general, but it is important only when there are no fundamental changes in the market. If the level of interest rates changes unexpectedly, technical analysis is incapable of explaining the market behavior. What is the point of analyzing the market using Bollinger Bands, RSI, or Stochastics when an exchange rate surges 1,000 pips without any correction?

Therefore, currency traders must always identify and distinguish the prevailing market forces in order to understand and to forecast the dynamics of the upcoming market action. These markets forces create different market phases and thus different conditions for traders.

These are some examples regarding different market dynamics:

  1. Ranging Markets (Weak Trends, Price Moving within Historical Support and Resistance, No Key Price Breakouts)
  2. Dynamic Fundamental Conditions (Fundamental Changes, Large Price Swings without Correction, No Technical Analysis)
  3. Dynamic Technical Conditions (Technical Analysis, Trending Markets, ABCD Patterns, Price Breakouts, Price Corrections)

From these three (3) phases, the easier to trade is the 3rd: ‘Dynamic Technical Conditions’ and the hardest is the 2nd: ‘Dynamic Fundamental Conditions’. Fundamental-driven markets require a macroeconomic understanding and the implementation of extremely tight money management.

Find More Forex Trade Tips: » Forex Trading Tips

ForexExperts.net ResearchMinor or Cross-Currency Pairs

 

What are the Minor Pairs?

Minor Pairs or Forex Crosses are Forex pairs that do not contain the US Dollar. Some of the minor pairs are very popular and very active in the Foreign Exchange market.  The most active minors include Euro on one side (EURGBP, EURJPY, and EURCHF).

» Learn about the Forex Majors 

1. EUR/GBP

Description: Euro (EUR) to British pound sterling (GBP)

  • Market Share (BIS): 31.3% vs 12.8%
  • Central Banks Involved: » ECB against the » BoE
  • Total reserves (including gold): 565 billion USD vs 130 billion USD

EURGBP INFORMATION

The cross rate of EUR to GBP is referred as the ‘Chunnel’ because of the Channel Tunnel that connects UK and Europe. Despite EURGBP is not a Forex Major, it is a very liquid Forex pair. Global brokers offer EUR/GBP in very tight spreads and that makes it a very popular choice for day traders and scalpers.

(↑) Historical High: 0.9805 (2008)

(↓) Historical Low: 0.5678 (2000) – 0.3380 (1953)

EURGBP KEY FACTS

  • Euro (28%) is the second most held reserve currency in the world, while the British Pound Sterling (4%) is the third
  • The Euro area and the UK are very close trade partners
  • Germany is the UK''s largest single-country trading partner
  • The British exports to Eurozone account 59.7 billion USD
  • The Eurozone’s exports to the UK account 56.5 billion USD

TRADING EURGBP

  • EUR/GBP is the most liquid Forex Minor
  • The most active hours to trade the EUR/GBP occur between 12.00 and 16.00 GMT
  • EURGBP average daily volatility (50 weeks) is 1.10% or 93.79 pips

 

2. EUR/JPY

Description: Euro (EUR) to Japanese yen (JPY)

  • Market Share (BIS): 31.3% vs 21.6%
  • Central Banks Involved: » ECB against the » BoJ
  • Total reserves (including gold): 565 billion USD vs 1,233 billion USD

EURJPY INFORMATION

EURJPY or else the ‘Euppy’ or ‘Yuppy’ is a very popular Forex minor based on the vast economic size of the European and the Japanese economies.

(↑) Historical High: 402.49 (1975)

(↓) Historical Low: 88.87 (2000)

EURJPY KEY FACTS

  • Euro and Yen combined account 32% of all global currency reserves
  • The Japanese economy is the 3rd largest in the world (4.1 trillion USD GDP)
  • Japan is holding the second largest amount of foreign reserves worldwide (after China)
  • The Japanese exports to Eurozone account 7 billion USD
  • The Eurozone’s exports to Japan account 56.5 billion USD

TRADING EURJPY

  • EURJPY is highly correlated to USDJPY
  • EURJPY enjoys considerably large liquidity and very tight trading spreads
  • EURJPY average daily volatility (50 weeks) is 1.09% or 134.54 pips

Analysis of the Seven (7) Forex Majors

What are the Forex Majors?

The Forex Majors are the most liquid currency pairs that contain the US Dollar either on the base side or on the quote side. The majors include seven (7) pairs. 

1.  EUR/USD (Euro / United States Dollar)

2.  USD/JPY (ForexExperts.net ResearchUnited States Dollar /Japanese Yen)

3.  GBP/USD (British Pound / United States Dollar)

4.  USD/CAD (The United States Dollar / Canadian Dollar)

5.  USD/CHF ( The United States Dollar / Swiss Franc)

6.  AUD/USD ( Australian Dollar / United States Dollar)

7.  NZD/USD (New Zealand Dollar / United States Dollar)

 » Learn about the Forex Minors

 

(1) EUR/USD

Description: Euro (EUR) to the United States dollar (USD) or else the ‘Fiber'

  • Market Share (BIS): 31.3% vs 87.6%
  • Central Banks Involved: » ECB against the » FED
  • Total Reserves (including gold): 565 billion USD vs 384 billion USD

EURUSD INFORMATION

EUR/USD or else the ‘Fiber’ is the most traded currency pair in the Forex market, accounting 23% of the total market activity (EURUSD share was 30% in 2001). About 88% of all Forex transactions are denominated in US dollars.

(↑) Historical High: 1.6039 (2008) – 1.8700 (1973)

(↓) Historical Low: 0.6688 (1985)

EURUSD KEY FACTS

  • The US dollar is the most traded currency worldwide (87.6%) while the Euro is the second (31.3%)
  • The US Dollar (62%) and the Euro (28%) are the most important reserve currencies in the world
  • EURUSD enjoys almost perfect information as the media covers every aspect of economic development regarding the US and Eurozone
  • USA, UK, and China are the euro area’s main trading partners
  • The American exports to Eurozone account 246.2 billion USD
  • The Eurozone’s exports to USA account 369.5 billion USD

TIPS WHEN TRADING EURUSD

  • EURUSD offers the best conditions for trading Forex (enormous liquidity and very tight spreads)
  • The best time to trade EURUSD occurs during the European and New York session overlap (13.00 GMT to 16.00 GMT)
  • The best month to go long to EURUSD is December and the best to go short is January
  • EURUSD is highly correlated to GBPUSD (+0.8 to +0.9)
  • EURUSD average daily volatility over the past 50 weeks was 0.87% or 93.82 pips 

 

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(2) GBP/USD

Description: British pound sterling (GBP) to the United States dollar (USD) or else the ‘Cable

  • Market Share (BIS): 12.8% vs 87.6%
  • Central Banks Involved: » BoE against the » FED
  • Total reserves (including gold): 130 billion USD vs 384 billion USD

GBPUSD INFORMATION

The British Pound (GBP) to the United States dollar (USD) or else the ‘Cable’ is one of the three most heavily traded pairs in the currency market. GBPUSD accounts about 9.2% of the overall Forex market volume (13.4% in 2004). The American economy is the largest in the world while the British economy is the 5th largest (2,650 billion USD).

(↑) Historical High: 2.6163 (1972)

(↓) Historical Low: 1.0438 (1985)

Subcategories

There are many different practices for predicting the exchange rate movements. Many Forex traders use technical analysis and charting tools to make trading decisions.

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