Learn About the Currencies You Trade

To get started, you'll need to understand what you're trading. Understanding the currencies that you buy and sell makes a big difference. For example, a currency may be bouncing upward after a large fall and encourage inexperienced traders to "try to catch the bottom." The currency itself may have been falling due to bad employment reports for multiple months. Would you buy something like that? Probably not, and this is an example of why you need to know and understand what you buy and sell. Currency trading is great because you can use leverage, and there are so many different currency pairs to trade. It doesn't mean, however, that you need to trade them all. It's better to pick a few that have no relation and focus on those. Having only a few will make it easy to keep up with economic news for the countries involved, and you'll be able to get a sense of the rhythm of the currencies involved.



Linkback: https://www.forex.zone/forex-education/29/learn-about-the-currencies-you-trade/795/

right.
Every currency pair must have a reason why it goes up or down, and we have to understand that. We must also understand every factor that can move the value of a country's currency.
For example, when the GBPUSD pair drops, it does not mean that the USD currency is strong, the GBP currency may be weak.

To find out the reason why a pair weakens / strengthens indeed we have to know the two currencies that we are trading. In addition, it is also important to note the correlation between pairs so that we are easier to find out what currencies are dominant.

That's what I want to ask, about currency pair correlation. Because according to some sources, this correlation technique can be used to maximize profits.
So can you explain a little about this correlation?

Pair correlation is the relationship between pairs, the value of correlation in general ranges between -1 and 1. Correlation -1 means that both pairs have a perfectly negative relationship, meaning that the pair moves in the opposite direction. If one of them rises, then the other one will go down.

Conversely, correlation 1 means that both pairs have a perfectly positive relationship, where both move in the same direction. If one pair rises, the other pair will also rise.

For example the EUR / USD pair and GBP / USD have a positive correlation and tend to move in the same direction even though not both pairs are in rhythm because the correlation between pairs is dynamic.

So when I choose buy EURUSD, then I can also buy GBPUSD? that way I can maximize my profit.
But in my opinion this technique is a double-edged knife. You could say we will get a double profit when my analysis is correct, but I will also experience a substantial loss if my analysis is wrong.

The point is that our trading is easier by mastering the pair that we are trading and knowing because the fundamentals of the price movements of the market are fundamental. That way trading will be directed and no doubt when we take buy / sell positions according to our analysis.

Each pair does have its own characteristics and we must understand it, each pair is also different from each other so we only need to trade with a pair that is really close to our understanding.

Choosing currency pair for trading also an important part as trader, many trader maybe choose eurusd because this pair has characteristic with good average movement and small spread, for scalping trading this pair is very suitable for scalper, indeed currency also influenced by fundamental news on these countries, although not all news will giving impact but reading news also good for trader

aside from technical and fundamental, many pair has their own characteristic, and thats why i agree from what you said. we need to know and fully know about each pair and the major pair like GBPUSD EURUSD and many more, of course ti gain some pip and profit haha

This is why I always trade in 2 or 3 pair, never jump to 5 or more pair if you dont know how the market work, at least focus in 1 or 2 pair for started. If you think you good enough, then go to other pair

Cheer