The Best Currencies

On November 23, 2010 | By | In Currencies

In general we can say that the best currency pairs for scalping are those that are not prone to registered sharp movements in a long period of time, or if they are, such movements are less frequent than in the other currencies’ cases. Considering that, the best group for scalping is the group described as the major pairs, and among them, the EUR/USD pair is the best one ought to its characteristics, as it is the most liquid and least volatile one.

Major pairs

In this group could be included pairs such as the EUR/USD, the GBP/USD, the USD/CHF, and other pairs formed by some of the currencies of the most powerful and stronger countries all over the world. Although the pairs that include the JPY (Japanese Yen) can be also included in this group, they behave differently and could be risky to treat them as the others.

The main characteristic of the majors pairs is liquidity. Their second characteristic is relatively subdued responsiveness to market shocks. Any cause that could evolved into a 100 pip movement in the AUD/JPY pair, will at the same time move the EUR/USD by 30 points in most of the cases, and sometimes even  by less points. The major pairs are used all over the world because their common trade; almost all the banks and important institutions can buy, sell and change money in these currencies. They are the giants of the currency market in terms of trade volume, and slowly movement.

The scalpers that would not like to risk so much and get conservative profits could concentrate their operations in the major pairs.

Carry pairs

Carry pairs have the good nature of been liquid, but also the problem of been volatile. This pairs such as the EUR/JPY or USD/JPY are traded all over the world but this operations have a higher risk ought to their volatile behave. The Japanese currency is used by many financial actors to invest and buy in insecure business and assets.  As a result, when there is any crisis, change or shock in the market these pairs react in an excessive mode which is even difficult to interpret for the traders, especially in the short time frame where they usually act.

The carry pairs are mainly used for incoming operations and interests. Scalp with them is not always a secure business because due to a unknown causes, the spreads could widen so quickly that even a stop-loss order couldn’t avoid us from an important loss. The sudden widening can also happen with the major pairs but in the carry pairs case is more common, deeper and longer.

It’s not recommend for the beginners to scalp in these currencies, the experienced scalpers could trade them according to the typical tendencies of following strategies and achieve benefits from the breakouts and any kid of sharp movements.

Exotic Currencies

Exotic is a term used in the options market, but we are also going to use it to discuss about the “rare” or uncommon currencies, characterized for been less liquid and less well-known. Almost all of these pairs are unsuitable to scalping. This group includes volatile pairs as the NOK/USD (NOK being the Norwegian Krone), the BRL/USD pair (with the Brazilian Real), and many other formed by lesser known different currencies.

This group is not suitable to scalping because we can often find unpredictable price gaps that make almost impossible to use, in a short period of time, money management strategies.


One Response to “The Best Currencies”

  1. [...] This pairs such as the EUR/JPY or USD/JPY are traded all over the world but this operations have a higher risk ought to their volatile behave. The Japanese currency is used by many financial actors to invest and buy in insecure business … View full post on EUR/JPY – Google Blog Search [...]

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