We as a trader dreamed of forex
glory but faced harsh reality. Our Losses piled up as emotions overruled
strategy. Overtrading and revenge trades drained our account. Sleepless nights
and self-doubt are sure thing to follow to a losing trader. The first year in
trading is brutal for all of us.
After a year or few months, we
realize that our focus should not be on booking profits but on surviving in
this brutal market. Jack of all trades and master of none, will not work in the
trading industry. We must master one currency pair and couple of strategies to
win this game.
EURUSD is one of the favourite currency pair among treaders because of several reasons.
1. High Liquidity & Low Spread
The EURUSD is a major currency pair and the most traded in the world. It is available to trade on all the major broker’s platform. Since it is most traded pair the volume is at higher side and spread (difference between bid and ask price) is the lowest in the market. In fact, there is no other currency pair that has lower spread compared to EURUSD.
2. Lower Volatility
EURUSD is a stable currency pair as EUR and USD both are stable and strong currency. The market volatility is less compared to other exotic currency pairs as it is less affected by news event outside EURO zone.
3. Clear Trends
The EURUSD move in strong trend
and remain trending most of the time, if it is in range it remains in range for
a long period of time. It is one of the favourite currency pair fir beginners
to trade as it is easy to apply technical analysis, trendlines, Support &
Resistance & indicators on the chart.
4. Trade With Low Capital
The EURUSD is the most stable & liquid currency pair, so the brokers require lower margin to initiate a trade compared to other high volatile currency pairs. It allows to trade with less capital. It is not advised to trade with big capital when somebody is just starting.
5. Global Economic Influence
The Eurozone and the USA are two
of the largest economies in the world. USA and Europe releases economic data
(e.g., interest rate decision, GDP reports, initial job loss claims, Factory
production) almost every week. These data provide trading opportunities based
on fundamental analysis and technical analysis. Hence, EURUSD is one of the
best currency pair to trade on news event.
6. 24-Hour Market
Forex market runs for 24 hours
from Monday to Friday. EURUSD is actively trades across all sessions (European,
US & Asian Session). A trader can choose any one session and can actively
trade in intraday as well. The flexibility allows trader to trade with a full-time
job as well.
7. Predictable Reactions to News
The EUR/USD often reacts according to the news. It is almost impossible to rig the market. News event such as Federal Reserve or European Central Bank announcements make the market move in one direction, Beginners can learn to anticipate these movements and develop strategies accordingly. At the end of the day each trader needs to develop his/her own strategy.
Tips for Beginners Trading EUR/USD:
· Start with a demo account to practice.
· Deposit a small capital ($100) and trade with
smallest possible size.
· Focus on learning process, you will lose
money in the beginning, so lose less.
· Always place a stop loss in the system and
not in your mind.
· Keep tracking news event and economic data.
· Do not use leverage more than 40X, Over
leverage kills account.
· When in profit, do not be quick to book the
profit, exit once the stop loss order is hit.
As Bruce Lee said- I fear not the
man who has practiced 10,000 kicks once, but I fear the man who had practiced
one kick 10,00 0 times.
As a trader we need to choose one
currency pair to master. And EURUSD is the favourite currency pair among
traders for above reasons.
