Trading instruments

For any trader (broker, banker) the analysis of the currency instruments statistics gives a unique possibility to correct its own trading systems, tactics, strategics. Traders who want to use technical approaches at currency market should keep in mind the difference in statistics characteristics of the main currency pairs. If EURO and GB pound trade against US dollar this does not mean that they will be trading equally at the market. More detailed statistic analysis of the market determines that some technical instruments are more adapted for some currency pairs then for the others. The approach that take into consideration the unique features for particular currency pairs will give the better result than general approach which does not distinguish features of currency pairs. At least, trader should know statistical data in order to choose trading instrument to consider the following factor. Currency brokers all over the world provide the most qualitative client service for currency pairs which have leading turnovers.

Among results of the statistical monitoring it is necessary to detach turnover's changes at currency markets because they have reflected some important moments of the currency market development. First of all average daily turnover increased among all low-profitable instruments, this reflects investors tendency to the «safety currency» in conditions of the economic crisis. RAFMM analysts think that this advancement was much stronger than it was expected. Secondly, the turnover’s growth was observed by various transactions. Changes in hedging activity can be considered as one of the factors which underlying growing importance of swaps as currency instruments. Also the turnover’s advancement of the forward contracts took place. The turnover at spot markets grew up slightly and remained approximately equal to turnover for the similar last period.

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Statistical data is provided by participants of the Association

The part of the four most traded currencies decreased because of the investors interest reduction to the high-yield but risky currency instruments. However EUR/USD pair still is the most popular currency instrument. The most actively traded pair EUR/USD also gets investors attention through the EURO cross-rates (i.e. EUR/GBP, EUR/CHF, EUR/JPY), the trend of this rates often goes oppositely to the US dollar trend. For example, in negative conditions for US dollar EURO becomes stronger from US dollar sale. However, less liquid US dollar pairs (i.e. USD/CHF) are sold through more liquid Euro cross-rates, this provides the Euro supply in EUR/USD pair.

The next most traded pair is USD/JPY. Historically this pair is considered as the most politically sensitive pair, as the USA often use currency rate as lever in trade negotiations with Japan. While China has replaced Japan in terms of trading tensions, USD/JPY remains as regional index for China and other less liquid Asian currencies.

As well statistical data for two most illiquid pairs USD/CHF and GBP/USD which give difficulties to the technically-focused traders are very interesting. The Swiss franc holds a firm place in the list of currencies, because Switzerland has a unique status as world investment shelter. By some estimates one-third of all private world assets are kept in Switzerland. Swiss franc historically is considered as alternative to US dollar during geopolitical and economic uncertainty.

GB pound (sterling) is also a less-liquid currency it is connected with high value of position (in US dollars) and with trade which is oriented to the EURO in Great Britain. GB pound is similar to the Swiss francs' features, but GB pound reacts to fundamental news from Great Britain and the USA more strongly. GB pound prices movements are also extreme and move in one direction on big motions, when traders are on the wrong side of transaction and pursue after the illiquid market up to the end.

Analyzing all statistical data it is possible to conclude that traders need to use more predicted approach to trade with all currency pairs, especially in risk management (i.e. the size of the transaction in relation to levels of spots). At the point of view of the technical instruments the modern trends determined on the statistical data mean in practice that traders should be disciplined in usage of stop-orders and consider a bigger error limit.

Leading currency pairs at FOREX

EUR/USD – 23%

GBP/USD – 18%

USD/JPY – 17%