Trading Tips: Trading the EUR/USD

FX Strategy Articles > Fundamental articles

Since its introduction in 1989, the currency pair of the euro and the US dollar (EUR/USD), has become one of the most popular pairs among traders of different levels of experience. But what led to its popularity? Let us explore some of the reasons why, starting with…

Reason #1: The EUR/USD is a Stable Pair

Despite depictions in movies as being aggressive individuals, not all traders are actually like that. In fact, there are those who choose to make safe investments by choosing ones that are stable. The same is true among forex traders. Because of that, many traders choose to trade the EUR/USD pair because of its relative stability. That means you run little risk of losing money when you trade this pair, granted of course that you study the pair carefully. But we will save that for later.

Because of its stability, this pair is popular not only among experienced traders who want to make safe investments, but also among novice ones. Those new in the forex market naturally would like to test the waters without busting all their finances on their first try. Thus, its low-risk characteristic makes the EUR/USD pair attractive among new traders.

Reason #2: It is an Active Pair

As the most-traded pair in the forex market, there is a huge potential for profit in trading the EUR/USD. Thus, those who prefer to be short-term traders benefit greatly from the frenetic activity this pair experiences on a daily basis. They can thus buy quickly and sell quickly if they want to, and consequently earn quickly as well.

A Word of Caution

Of course, despite the low-risk characteristic of the EUR/USD, there is always the risk of losing money when you trade currencies. Because of that, it is important that budding traders keep a close watch of developments in the economies of Europe and United States, such as changes in interest rates and consumer price indices, as these create a significant impact on the value of the currency pair. Aside from that, the historical movements of the pair must be considered as these may provide clues on how it will perform in the future.

By FX Strategy Team, Published on 18th of March 2013
eTorro - Trading Starts Here

Start Trading Forex with up to $10,000

  • 100s Videos and FX Strategy articles
  • Advice from our FX traders
  • Practive free with using real time