Forex is a global currency exchange market. Forex is an inter-bank currency exchange market in which currencies are traded at free prices. Like the stock market, forex brokers and the services they provide differ from each other, so it is important to find the option that is right for you.

The effectiveness of trading depends directly on the selected trading instrument. Still, it would help if you considered each currency pair’s characteristics, which you should pay attention to. 

HOW TO TRADE?

There are two main types of trading. The first is simply to buy and sell currency pairs, where you purchase one currency at the cost of the other. The second involves trading derivatives, whereby the value of the derivatives changes as currency rates change.

The most common way is simply to buy and sell currency pairs, very similar to the way you would trade shares on the stock market. In this case, you are counting on the exchange rate changing in a way that favors you.

LIQUID CURRENCY PAIRS IN FOREX TRADING ADVANTAGES

The term “liquid asset” is often used when discussing trading on financial markets.

In Forex trading it’s applied to currency pairs and characterizes how popular and in demand this pair is among trading participants. 

In the classical sense, liquidity is the speed at which you sell your asset at the market price, how much it is in demand, how quickly a buyer can be found and what it costs you.

Based on this, liquid currency pairs in Forex should be sold at record speed, but the reality is a little bit different.

The speed of execution of orders in the trader’s trading platform is approximately the same, no matter which pair you have chosen, but the commission of the spread for opening transactions differs considerably.

THE PECULIARITIES OF USD/CNH TRADING

How to Start Forex Trading in South Africa? Your future success depends on your choice of trading instrument, namely the currency pair.

The world’s top currencies by turnover are combined into the most popular currency pairs at Forex, which have low commissions and are in great demand in the currency market.

Naturally, beginning traders try to use the instruments they have heard about, albeit faintly.  

Of course, these assets are in the leaders for a reason, but this does not mean that they are easy to analyze and easy to trade.

Unfortunately, the massive demand for the main instruments generates a lot of influencing factors, which makes these instruments hard to predict.

USD/HKD PAIR. TRADING PECULIARITIES

It is not a secret that traders divide all currency pairs into major ones, crosses, and plain exotics. The major currency pairs at Forex are the most popular on the world market, so we can observe a great deal of liquidity in them. So, as a rule, traders prefer to work with such pairs due to their high volatility and cross rates to hedge risks.

But you will seldom find recommendations to trade exotic instruments in textbooks.

Exotic currency pairs can bring good profit and will be especially interesting for investors who prefer to create low-risk schemes with hedging elements to profit from swaps.

THE EUR/CAD CHARACTERISTICS

Top Forex brokers in South Africa avoid cross rates due to little volatility and high commission, which the broker sets as a spread.

However, not all currency pairs at Forex, which we traditionally call exotic, have weak liquidity with high commission requirements.

For example, EUR/CAD combines the interaction of highly developed countries like Germany, France, and other members of the European Union with no less developed Canada and its developed industrial complex.

The economic relations between the developed European Union and industrially developed Canada generate significant interest in this currency pair; hence, the volatility and spread size at this cross-rate are nearly as good as the most popular assets.

GBP/AUD CURRENCY PAIR

The trader’s performance directly depends on the currency pair to work with. Subtleties of the instrument movements, factors that affect both currencies separately and from which the rate is formed, are the basis for making the correct trading decisions.

GBP/AUD is a trading instrument that combines the two national currencies, the British pound, and the Australian dollar.

When you see this symbol, you should clearly understand that the chart shows the amount of Australian dollars to be paid for 1 British pound.

Both of these currencies are slightly inferior to such giants as the dollar and the euro but confidently occupy the fourth and fifth places in the world regarding money turnover.