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The best currency pairs in hedging
This article is part of our guide on how to use hedging techniques to Forex trading, if you started with this article, we recommend that you go to the first part of this series on hedging in Forex.
Hedging is an activity with a high degree of specialization requires technical and basic settings to exploit to the fullest. In the previous section we examined the necessary conditions that must be met in the Forex companies. Here we will take a look at the currency pairs that fit more with hedging strategies.
In General, the best currency pairs in hedging are those that are not subject to sharp price fluctuations, even if they are less frequent in this context are best set in hedging is a group of major currencies that we will be discussing in this article, including, less volatile and more liquidity, currency pair USD/euro.
Major currency pairs
This group contains the currency pairs such as the EUR/USD, GBP/USD, USD/CHF, etc which are the dominant economic powers of currencies and the strongest in the world. Although the Japanese yen is within that group the behavior differs from those coins, we will shed light on the currencies of Curry.
The main property for major currency pairs are liquidity, the second feature is the relative calm in response to the market shocks. Event, which can cause movement of a currency pair AUD/JPY 100 PEP will EUR/USD moves only 30 babe, maybe less. The main currency in circulation throughout the world, in almost every important institutions (as they also reserve currencies). They are giants in the currency market in terms of size and slow movement.
Hedging Forex traders who prefer trading range or use slow movements and small movements of currency pairs can focus their activities in the major currencies.
Curry currency pairs
Curry pairs liquid but volatile. Pairs like USD/JPY dealing with around the globe. But volatile, because many financial players use the yen aliabni borrowing and risky asset investment. As a result, when there is shock in the market, the pair interact too, making it difficult to translate that into a deliberative decisions, especially in the short time which he preferred traders hedging.
Curry coins are traded mostly because interest earnings. Despite the possibility of hedging them too, and that was not a good idea because it sometimes spreads the difference expands too so stop-loss orders protect us from losses. The increase in the difference of the spread is not limited only to currencies of Curry, but while in the EUR/USD pair is often seen after non-farm jobs report or reports of the change in interest rates but of course in this Curry coins more frequent and deeper impact.
We do not recommend the junior a hedging in currency pairs Curry. Forex hedging experienced can trade using altrained strategies to exploit the sharp price moves albrikaots for those couples.
Exotic currencies
Exotic currency, this name is used in the options market, and use that name in our articles, and are few liquidity did not favour the use of hedging. This group contains of fluctuations such as currency pairs Norwegian krone/US dollar (NOK Norwegian krone) and Russian ruble, Brazilian/BRL/USD dollar and other currency pairs is unknown.
This group is not suitable in hedging price differences due to the unexpected that can occur. Especially for beginners should avoid trading in those currencies.
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