Trading EURUSD - Four Vital Pros and the Con of Trading EURUSD

Trading EURUSD is usually the very first stop for many newbie traders. Yet, if you use it without knowing the basics of the pair, their advantages and disadvantages you can be sure you'll blow your account.

The Euro is the second most used currency behind the dollar.It is used by the 16 countries that comprise the Euro zone.Therefore we cannot undermine the fact that it is the most traded currency pair. It is so essential that the movements of the EURUSD often give us a direct clue of what is presently going on in the global economy It is great for the Newbie to the FOREX market as it often moves at a slower pace compared to other major currencies.It moves in an opposite direction to the USDCHF but in the same direction with the GBPUSD.

Basic Features to Know when trading EURUSD

1.It typically has a Bid-Ask spread ranging from 1 to 3 pips.

2. Average daily movement of the pair is 90-100 pips.

3. The best time of trading the pair is during the euro session i.e. between 8 GMT and 17 GMT.

Incidents that influence the price of the EURUSD pair.

1. When trading the EURUSD the most important factor you should know that affects the quote of the pair is the difference in interest rates between the FED and the ECB.

2. Traders should also know that a strengthening dollar leads to a decrease in the EURUSD quote.

3.Primary activities by the FED affect the USD therefore influence the pair directly.

Pros of trading the EURUSD

1.The most important reason and greatest advantage of trading the EURUSD is due to its very high liquidity.

2.It is a mixture of the two most used currencies in the EUR and USD,therefore it is the most traded pair and therefore worth trading because everyone trades it.

3.The combination of the above factors lead to our third reason being the EURUSD has very tight Bid ask spreads.Conclusion: you can bank a lot of pips with the EURUSD but still give up little commissions.

4.It moves in an opposite direction to the USDCHF but in the same direction with the GBPUSD.This implies actions of the other major pairs can be used as part of your technical analysis.

Con of trading EURUSD

It is unimaginable to think such a liquid pair with tight spreads has a disadvantage.But yes! The EURUSD has a drawback VolatilityThe EURUSD is a very risky pair.Its riskiness is due to its direct linkage to global economic events.This high instability means the EURUSD is riskier in relation to other less volatile currencies.

Conclusion

The realization is if you have a good grasp of both your fundamental and technical analysis then the EURUSD is for you.If you have a deficiency in any one of this domains the EURUSD will frustrate you because of its riskiness and its tendency to range.