How to Make Money Trading EURUSD

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How to Make Money Trading EUR/USD?

Trading currencies has been with us for a long time. Binary options trading is a fairly new frontier considering that it has not reached its peak yet; it is still in the growth phase as there are many people all over the world who do not even know it exists. For those in it, it a good way to make money by making trades from their shifting values in relation to one another.

In traditional forex trading, you actually buy the currency when its value has dropped and sell it when it rises and trades of that nature. This is what most people will tell you about forex trading. Binary options trading on the other hand, is making trades on the value of currencies but you do not buy the actual currencies. You trade in binary option pairs.

Binary Option Pairs

This is also referred to as ‘pairs trading’. In this type of trading, you will make predictions on the relative behavior of one currency as compared to another within a predetermined period of time. To put it simply, you select two currencies and put them in competition. You then predict the changes in value of one of the assets against the other. The value can either rise or fall within the predetermined period. A correct prediction is what makes you a profit while a losing prediction loses you your investment in that particular trade.

Binary trading is considered as one the ‘Market Neutral’ trades because you can make money whichever direction the values go.

EUR/USD is the most popular currency pair

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  • 1. Your Binary Option Robot will analyse the market and decide, which asset (currencies, indices, commodities and stocks), is right to trade at that point in time.

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    2. The Binary Option Robot Will Predict the Price Movement

    Your robot will assess a wide-range of factors, and then make a prediction on how the assets price will move, saying: Call (up) if it believes the price will rise and Put (down), if it believes the price will fall.

    3. Decide on how much you want to Invest

    Then you need to decide how much you want to invest in the commodity and when that investment will expire.

    4. Collect your Earnings

    Finally, you collect your earnings (the good part!)

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    Trading EUR/USD pairs

    This is the most traded pair in binary options trading today and trend looks likely to continue for the foreseeable future. It juxtaposes the Us Dollar against the EU Euro. The two are the most liquid currencies today in the global currency markets and this adds to their popularity with binary options traders. The two are also the most traded currencies in the traditional forex markets.

    Like in the more widely known currency trading, the economic fortunes of the United States and that of the Eurozone countries play a big part in the value movements off these currencies. That is not to imply that they are immune to the happenings in the economies of the rest of the world. An event in the major indices in Asia is likely to cause more than just ripples in the USD and EUR values.

    Considerations prior to trading the EUR/USD

    Since you cannot trade blindly or make guesses on which way to trade this pair, there are a few general factors that you should take into consideration. This is before considering the other more specific news and events that can influence price changes. These factors are:

    • Trading time differences make binary options trading tricky and interesting at the same time. The North Atlantic trading sessions open a good number of hours after the Asian markets open. This means that if you are trading in the American and the European session you need to make short expiry times with this pair while avoiding the Asian currencies or making longer expiry times over short ones with this group.
    • The Asian session is usually a little slow for the American and European currencies. This means you should take longer expiry times on this pair.

    What makes price shifts in the EUR/USD pair?

    People always talk about how one currency can sneeze and another thousands of miles away catches a cold. This is true with the EUR/USD pair, but the analogy of sneezes and colds is not something that happens all the time. Economic news out of both Europe and the US will not make big changes in the pair, but there will be changes all the same and traders can make trades with these changes which will change from time to time according to what is happening in both economic zones. The fortunes of those countries’ economies are hardly recognizable from daily news unless there are major events with a significance implication to those two economic zones.

    What brings out more pronounced changes is the economic releases or announcements by various bodies in both zones about key economic performance indicators like changes in interest rates, unemployment figures, changes in value of production, consumption and exports.

    Best way to make money trading EUR/USD is with binary option robot

    Key economic releases to watch in Europe

    Among the key releases that you should watch out for in Europe that are likely to cause some changes in the values of the EUR/USD are the following:

    • Consumer Price Index (CPI): This is the most important performance indicator to come from the Eurozone. It is a report on the situation in Eurozone as regards inflation and what the European Central Bank (ECB) is doing to support positive results or to counter negative results. It is the main determinant of what the ECB will do to shape the short-term and long-term monetary policy.
    • Purchasing Manager Index (PMI): This indictor will show the performance of a sector in terms of expansion and contraction. This will influence ECB’s decisions arising from the data.
    • Gross Domestic Product (GDP): This release follows a meeting of top Eurozone economists every month and the data from such meetings shows the relative situation in the Eurozone economies.
    • Unemployment figures: These too are performance indicators. An increase in new jobs or their retention is a good indicator while loss of jobs and increased unemployment rates is not.

    Key economic releases to watch in United States

    The US economy is the largest in the world and so it is expected that there will be many releases on the state of the economy and its various sectors each and every month. These releases are also expected to have an effect in global indices as well as the currency markets including the EUR/USD pairings. These are the key releases you should watch out for:

    • Interest rates: There is always excitement and consternation in equal measure every time an announcement on the raising or reducing interest rates is imminent. The announcement usually causes movements in price as traders shift positions on the likely outcomes.
    • Jobs data: Unemployment rates, job losses and creation of new jobs are key indicators of the state of the economy and this will influences the dollar value in relation to the Euro and other currencies as well. This is especially so for the Non-Farm Payrolls data.
    • Consumer Price Index: As in Europe, this release is important too as an indicator of the state of the economy.
    • Others: Other important releases to watch are: Retail Sales, Institute for Supply Management, GDP, Producer Price Index, Durable Goods Orders, and other releases.

    All these releases assist traders to make informed choices when they are trading the EUR/USD pairs. Of importance is any release by the ECB and the Federal Reserve.

    The behavior of the EUR/USD in relation to releases, news and events

    Market volatility is to be expected at all times. It is only the level that changes between high and low. There many factors that determine how the EUR/USD pair behaves and this will include the time the release, news or event happens, the reasons for their happening and the financial implications of such factors. These are what you will need to collate, synthesize and analyze to enable you to come up with more winning trades than losing ones on this pair, and this is essence of all binary options trading.

    Trading with brokers and robots

    Trades and robots will promise to give you winning signals so that you can make profits with your trades. They use the same indicators noted above but they have the added advantage of having created algorithms to help them with all the analyzing and synthesizing. This is where they will always have one on you when it comes to binary options trading. The signals they promise will give winning trades in most cases if you are trading with the right brokers and platforms. Issues of scams abound and a careful selection process is demanded of you if you do not want your investment to fall into the wrong hands.

    Trading with the EUR/USD pair is preferred by most traders in the binary options market because it is always rising and falling. During the NorthAmerican and European trading sessions, traders who prefer short expiry periods for their trades have a busy time. The volatility makes it an interesting place to be as the values change rapidly, sometimes in periods as short as 60 seconds. In the Asian trading sessions, traders in the EUR/USD will be experiencing a lull of some sort. At this time they will mostly be making longer term expiry periods because the movement in values is not as rapid as it is during the North American sessions.

    With the expected growth and expansion of binary options trading in both the players (traders, brokers and trading platforms) and in the traded volumes, the EUR/USD pair will continue to dominate proceedings in the currency markets. The best thing is to ride with it and always keep watch of the main indicators as well as the releases from both economic zones.

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    How to trade EUR/USD?

    > How to trade EUR/USD?

    EUR/USD is one of the most traded currency pairs in the world and it forms part of the “Majors.” This pair represents the world two largest economies and it has faced most volatility since the inception of the euro in 1999. It is thus the most liquid currency pair in forex and consists of the two major currencies worldwide – the U.S. Dollar and the Euro. Here’s what you need to know about this asset.

    The EUR/USD Currency Pair

    The amount of U.S. dollars in circulation is controlled by the Federal Reserve Bank (Fed), and all actions take place during the scheduled Federal Open Market Committee (FOMC) meetings.

    The Euro, on the other hand, is the second most traded and the largest reserve currency across the globe. It is the official currency of the European Union and it has been adopted by 19 to 28 states, with Germany and France as the predominant ones.

    The EUR/USD forms part of the “Major Currency Pairs” in the foreign exchange market. Majors have the U.S. dollar quoted either as the Base Currency or the Counter Currency and they are also the mostly traded ones on the market.

    Here, the EUR/USD pair is hugely impacted by various factors, amongst which, the obvious ones, are the health of the European and American economies.

    Trend of the EUR/USD

    Let’s have a look at the trend of the EUR/USD pair since the beginning of 2020. As you can see in the chart below, the asset is seen much volatile and this is not only for January but the currency pair is always affected by events and major news.

    Now that you are accustomed with the EUR/USD pair, let’s learn how to trade it.

    Steps to trade EUR/USD:

    1. Check your leverage value, this can either be 1:50, 1:100 or 1:200.
    2. Select the trading tool – FX/CFD.
    3. Select the EUR/USD pair and the trading volume or lot you want to trade on.
    4. Select your Stop Loss and Take Profit.
    5. Opt for BUY or SELL.
    6. You can monitor your trades and close it whenever you wish.

    The forex market is open 24 hours a day, 5 days a week. However, that does not mean you should trade whenever you want, it is advisable to trade when the currency pair is active and there is lots of volume and transactions happening. In this case for instance, it is recommended to trade the EUR/USD pair during these schedules:

    • American Session (New York – USD) – 12:00 GMT – 20:00 GMT
    • European Session (London – EUR) – 07:00 GMT – 16:00 GMT

    Strategies to Apply When Trading EUR/USD

    3 strategies can be used while trading the EUR/USD pair:

    Buy Or Sell The Pullback

    The trends of the EUR/USD currency pair often zigzags up and down taking its price from one level to another in a positive feedback loop that can generate considerable momentum. However, this swift movement can end with a shift in the supply/demand equation. The pullback strategy uses this counter trend movement to identify important support and resistance levels that should end the price swing and restore the initial trend direction. These levels often come at prior highs or lows.

    Buy The Breakout/Sell The Breakdown

    The EUR/USD tends to go back and forth within confined boundaries over extended time lapses. This generates well-defined trading ranges and trends. Traders often benefit from low-risk trade entries during these phases. This happens when the support/resistance levels break, giving way to a strong rally or selloff. A good timing accounts for a lot.

    Enter Narrow Range Patterns

    The EUR/USD also prints narrow range price bars. These bars lower volatility and raise apathy levels. This gives a considerable entry signal for a breakout or breakdown. With this strategy, traders enter positions within the narrow range pattern, with a tight stop in place in case of a major reversal.

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    How Do You Make Money Trading Money?

    Investors can trade almost any currency in the world through foreign exchange (forex). In order to make money in forex, you should be aware that you are taking on a speculative risk. In essence, you are betting that the value of one currency will increase relative to another. The expected return of currency trading is similar to the money market and lower than stocks or bonds. However, it is possible to increase both returns and risk by using leverage. Currency trading is generally more profitable for active traders than passive investors.

    Key Takeaways

    • It is possible to make money trading money when the prices of foreign currencies rise and fall.
    • Currencies are traded in pairs.
    • Buying and selling currency can be very profitable for active traders because of low trading costs, diverse markets, and the availability of high leverage.
    • Exchanging currency is not a good way for passive investors to make money.
    • It is easy to get started trading money at many large brokerages and specialized forex brokers.

    Buying and Selling Currency Explained

    It is important to note that currencies are traded and priced in pairs. For example, you may have seen a currency quote for a EUR/USD pair of 1.1256. In this example, the base currency is the euro. The U.S. dollar is the quote currency.

    In all currency quote cases, the base currency is worth one unit. The quoted currency is the amount of currency that one unit of the base currency can buy. Based on our previous example, all that means is that one euro can buy 1.1256 U.S. dollars. An investor can make money in forex by appreciation in the value of the quoted currency or by a decrease in value of the base currency.

    How Do You Make Money Trading Money?

    Another perspective on currency trading comes from considering the position an investor is taking on each currency pair. The base currency can be thought of as a short position because you are “selling” the base currency to purchase the quoted currency. In turn, the quoted currency can be seen as a long position on the currency pair.

    In our example above, we see that one euro can purchase $1.1256 and vice versa. To buy the euros, the investor must first go short on the U.S. dollar to go long on the euro. To make money on this investment, the investor will have to sell back the euros when their value appreciates relative to the U.S. dollar.

    For instance, let’s assume the value of the euro appreciates to $1.1266. On a lot of 100,000 euros, the investor would gain $100 ($112,660 – $112,560) if they sold the euros at this exchange rate. Conversely, if the EUR/USD exchange rate fell from $1.1256 to $1.1246, then the investor would lose $100 ($112,460 – $112,560).

    Advantages for Active Traders

    The currency market is a paradise for active traders. The forex market is the most liquid market in the world. Commissions are often zero, and bid-ask spreads are near zero. Spreads near one pip are common for some currency pairs. It is possible to frequently trade forex without high transaction costs.

    With forex, there is always a bull market somewhere. The long-short nature of forex, the diversity of global currencies, and the low or even negative correlation of many currencies with stock markets ensures constant opportunities to trade. There is no need to sit on the sidelines for years during bear markets.

    Although forex has a reputation as risky, it is actually an ideal place to get started with active trading. Currencies are generally less volatile than stocks, as long as you don’t use leverage. The low returns for passive investment in the forex market also make it much harder to confuse a bull market with being a financial genius. If you can make money in the forex market, you can make it anywhere.

    Finally, the forex market offers access to much higher levels of leverage for experienced traders. Regulation T sharply limits the maximum leverage available to stock investors in the United States. It is usually possible to get 50 to 1 leverage in the forex market, and it is sometimes possible to get 400 to 1 leverage. This high leverage is one of the reasons for the risky reputation of currency trading.

    New forex traders should not use high leverage. It is best to start using little or no leverage and gradually increase it as profits and experience grow.

    Disadvantages for Passive Investors

    Passive investors seldom make money in the forex market. The first reason is that returns to passively holding foreign currencies are low, similar to the money market. If you think about it, that makes sense. When U.S. investors buy euros in the forex market, they are really investing in the EU’s money market. Money markets around the world generally have low expected returns, and so does forex.

    The benefits of the forex market for active traders are usually useless or even harmful for passive investors. Low trading costs mean very little if you do not trade very much. Using high leverage without a stop-loss order can lead to large losses. On the other hand, using stop-loss orders essentially turns an investor into an active trader.

    Getting Started With Forex

    The forex market was once much less accessible to average investors, but getting started is easy now. Many large brokerages, such as Fidelity, offer forex trading to their customers. Specialized forex brokers, such as OANDA, make sophisticated tools available to traders with balances as low as one dollar.

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