Choosing a currency pair to trade binary options – majors or crosses?
Trading binary options with currency pairs is one of the most popular and fast growing binary options trading modality worldwide. The forex exchange market is open almost 24 hours weekdays and the information available to the public is massive, making it easy to anticipate the trade parity price accurately moving direction.
Understanding currency pair majors or crosses
• Currency pair is the market price of any two preset currency traded in the forex market. E.g GBP/USD British pound to American dollars or EUR/USD Euro to American dollars
• Base currency or transaction currency is the monetary unit from which the quotation is made. The base currency is the first currency of the equation or the one in the upper part of it. e.g. GBP/USD, the British Pound is the base currency of this currency pair.
• Quoted currency is the second currency of the currency pair, and it represents how many of this currency is needed to buy one unit of the base currency. E.g. GBP/USD 1.54 means you need 1.54 USD to buy one GBP.
• Major is the name given to the most important currency pairs, which are formed by the strongest world currencies market value in USD. The major represents the global commerce and all of them are quoted in USD. The USD is the quoted currency of each major currency pair. GBP/USD, AUD/USD. EUR/USD, JPY/USD,
• Crosses are the name given to the currency pair formed by two of the main currencies without using USD, e.g. GBP/AUD, CAD/GBP, GBP/USD, etc.
• Exotic currency is any of the other world currencies, they are called exotic because the trading volume is lower than the major’s volume
• Exchange rate is the market value of the currency pair. EUR/USD 1.11 this means that for each euro you have to pay 1.11 USD, GBP/USD 1.54 this means that for each British pound you have to pay 1.54 USD.
Which currency pair to trade binary options – majors or crosses
Choosing a currency pair to trade will depend on mostly on your personal preferences and, the financial information sources that you use as a reference to get the market trends and updates. When you select Majors, mainly you are just considering the strength of the American economy against the selected region. On the other hand, when you choose to trade crosses you are considering two areas and their economic strengths individually, trading binary options with Crosse’s currency pair requires that you analyze both countries or regions financial and economic indicators.
Advantages of Major currency pair to trade binary options
• Widely spread Financial Information most stock exchange and financial markets report in real time the current and recorded exchange rate for major’s currency pairs.
• Price stability the currency pair exchange rate is very stable and the global economic indicators could anticipate any changes, price trend tend to last longer than crosses
• Trade around the clock 18 hours a day, the major rates are changing, this can mean better profits opportunity each time you adequately anticipate the price moment.
Advantages of Crosses currency pair to trade binary options
• Bigger profits the exchange rates between the two currencies are more volatile and can change abruptly during the day or the week.
• Inside information. The exchange rate depends on local and regional policies, which information can be not widely spread around the globe giving an edge to those who can get it first by reading local news.
• Time zone advantages if you trade during the market operations you can get fuel benefits of your Binary options trading strategies.