Trading strategy for the currency pair USD/CHF
Foreign exchange market involves trading of the currency pairs. Some of these pairs are in great demand among traders, some are less popular. The pair USD/CHF falls outside any definitions.
A trader will be able to earn profit on the pair USD/CHF provided he/she has special knowledge and skills. There are plenty of strategies and techniques for working with the USD and Swiss franc.
Let’s see how a trader can earn profit at Forex on the pair USD/CHF.
USD/CHF – how to make it work for our benefit?
First of all, note that the base currency in this pair is the USD, while CHF is a quoted currency. This is the first feature, which distinguishes this pair from the others, as usually the USD acts as the quoted currency. Exchange rate of any currency pair shows how much quoted currency shall be paid for one unit of the base currency. In our case we buy the USD for the Swiss francs. If exchange rate is 0.8778, you can buy one USD at the price of 0.8778 CHF.
Now we need to understand how much you can earn at Forex per day trading the pair USD/CHF.
In order to answer this question we shall see the attractive features of this pair and here we can mention:
- easiness in making a precise forecast of movement direction in this pair;
- stable price formation;
- high liquidity;
- simplicity in carrying out fundamental analysis.
Switzerland is a financial center of the world, a banking Empire, which widely attracts the largest investors of the world. This fact makes SHF a safe haven currency with a good reputation and traders working with this pairs usually receive stable income.
Traders who plan to work with this pair sometimes find it difficult to calculation the value of one pip. This is a disadvantage of all indirect quotes; however there is a formula showing how to do. A trader just needs to practice a lot in order to make this procedure simple.
The formula is as follows:
Value 1 pip in the pair USD/CHF = (lot size x minimum price): current price.
For example, if you place an order for 0.5 of the lot at a price of 0. 8877, a pip value will be 5.64. If we make a profit of 10 pips, it will be equivalent to 56.4 USD.
This pair highly depends on the fundamental factors and the data on changes in to interest rates GDP or employment in the USA may cause high volatility in the pair.
A trader shall also take into account correlation of this pair with the other pairs, especially with the EUR/USD, as these two pair are closely interconnected. Knowing the movement in the pair EUR/USD a trader can easier predict the movement in the pair USD/CHF.
It is important to trace history of the movement in the pair for a couple of years. Analysts has noted that in the past few years the pair has been moving in the sideways in the channel of one thousand points. Knowing this fact traders mark the upper limit of one thousand and the lower limit of 0.9000.
- If the price bounces up from the lower limit and goes up through one or two candles, it is recommended to open a buy position. In this case, Stop loss is placed below support level. Take Profit is usually placed at a level of 0.9500.
- If the price bounces from the upper level, traders shall open sell positions. Stop loss is placed above the resistance level. Take Profit order is usually placed at the target level.
In trading with the pair USD/CHF it is advisable to take into account specifics of the pair. If a trader has sufficient skills he/she can easily make reliable forecast and gain good profit. It is preferable to choose short-term trading and follow economic news.