Constituting elements of the "character" of currency pairs

　　Volatility

　　The difference in price fluctuations and frequency of different currency pairs is significant. For example, Euro/ The US dollar (EUR/USD) is one of the largest currency pairs in the market, and its volatility is relatively stable, affected by the combined influence of the euro zone and US macroeconomic data.

　　An Australian dollar / The Japanese Yen (AUD/JPY) is known for its high volatility, which is mainly due to the huge differences in economic structure, interest rate policies and risk preferences between Australia and Japan. When the global economic situation is unstable, changes in investors' risk appetite can cause large amounts of funds to flow between the Australian dollar and the Japanese yen, which will trigger the Australian dollar / Severe fluctuations in the yen exchange rate.

　　Relevance

　　There are complex correlations between currency pairs. Some currency pairs show positive correlations such as Euro/USD and GBP/ The US dollar, this is because the euro zone and the UK economy are related to each other to a certain extent, and are closely related to the US dollar. When the dollar weakens overall, the euro and the pound tend to appreciate against the dollar at the same time.

　　In contrast, some currency pairs show negative correlations, such as USD/JPY and EUR/ JPY. Due to the competitive position of the US dollar and the Euro in the international monetary system, when the Euro appreciates against the US dollar, the US dollar/JPY tends to fall while the Euro/JPY tends to rise when the yen is relatively stable.

　　Economic data sensitivity

　　Every currency pair has varying degrees of sensitivity to specific economic data. Dollar / The Canadian dollar (USD/CAD) is extremely sensitive to crude oil prices and Canadian energy-related data.Canada is a major oil exporter, and fluctuations in crude oil prices will directly affect Canada's trade balance and economic growth, and thus affect the exchange rate of the Canadian dollar. When crude oil prices rise, the Canadian dollar usually strengthens, causing the US dollar to / Canadian dollar fell.

　　Differential strategy based on the "character" of currency pairs

　　1. Trend tracking strategy

　　Applicable to currency pairs with obvious trends. For example, in the case of obvious economic cycles and monetary policy differences persist, the euro/ The US dollar may show a longer upward or downward trend. Traders can identify the start and continuation of a trend through technical analysis tools, such as moving averages, trend lines, etc., enter the market at the beginning of the trend establishment, and leave the market when the trend reversal signal appears.

　　In Euro/ Taking the upward trend of the US dollar at a certain stage as an example, when the price breaks through the long-term downward trend line upward and the short-term moving average crosses the long-term moving average, it can be regarded as an entry signal; and when the price falls below the upward trend line and the moving average begins to turn downward, exit should be considered.

　2. Range trading strategy

　　For currency pairs with relatively small volatility and price fluctuations within a certain range, such as the Swiss franc / During certain stable periods, the range trading strategy is more effective. Traders can determine support and resistance levels by observing the historical fluctuation range of prices. Buy when the price reaches the support level and sell when the price reaches the resistance level.

　　At the same time, set reasonable stop loss and take-profit points to control risks and lock in profits. For example, if CHF/JPY fluctuates within the range of 0.95 - 0.98, when the price falls to 0.95 When buying nearby, the stop loss is set at 0.94 and the take-profit is set at 0.98; when the price rises to around 0.98, the stop loss is set at 0.99 and the take-profit is set at 0.95.

　　3. Arbitrage trading strategy

　　Use interest rate differences and exchange rate fluctuations between different currency pairs for arbitrage. For example, the yen has maintained a low interest rate policy for a long time, while Australia has relatively high interest rates. Investors can borrow yen, exchange it for Australian dollars, and then invest in high-interest assets in Australia while focusing on Australian dollars. / Changes in the yen exchange rate.

　　If Australian dollars / The yen exchange rate remains stable or rising, and investors can not only obtain interest income from Australian dollar assets, but also obtain additional income through exchange rate fluctuations. But it should be noted that there is exchange rate risk in arbitrage transactions, once the Australian dollar / The yen exchange rate has dropped sharply and investors may suffer losses.

　　Trading case analysis

　　In pounds /As an example, during the Brexit negotiations, the “character” of the pound/USD has changed significantly. Due to uncertainty over the outcome of Brexit negotiations, GBP/ The volatility of the dollar has increased significantly and is highly sensitive to political news and negotiation progress. In this case, traditional trend tracking strategies may not work well, and an event-driven trading strategy is more appropriate.

　　When news of active Brexit negotiations is coming, the pound/USD tends to rise rapidly, and traders can quickly enter and go long after the news is announced; and when negotiations are deadlocked or negative news appears, the pound/ The US dollar will fall sharply, and traders should close their positions in time or short them backhand.

　　In-depth analysis of currency pairs "Character" and formulating differentiated trading strategies based on their characteristics are important ways to achieve stable profits. Traders need to constantly accumulate experience, improve their sensitivity to the market, and flexibly use various trading strategies to adapt to complex and changeable markets.