The EUR/USD pair is emerging as a top choice for its lower risk and higher profit potential. This guide cuts through the complexity and focuses on why the EUR/USD is a smart choice for both new and experienced traders. We’ll cover key aspects such as market volatility, optimal trading times, and effective strategies.
Good to know:
- EUR/USD is considered a safer option for both new and experienced traders in binary options due to its lower volatility and higher profitability compared to other assets.
- Forex trading can be done 24 hours due to the global network of banks, with price movements measured in pips.
- While EUR/USD is the most traded currency pair offering good liquidity and pricing, it can also be highly volatile, making it difficult to predict price swings accurately.
- Successful trading of EUR/USD in binary options involves choosing the right time frame, understanding market patterns, and being informed about European and US market news trends.
Choosing the right asset to trade with binary options is not easy. The selection process becomes even more difficult for new traders as they have no experience in any assets.
Out of commodities, forex, indices, and stocks, it’s forex that has minimal risk. So, no matter whether you are an experienced or new trader, this currency pair trading should be your choice to make a safe trade.
Moreover, the forex market is not as volatile because the collateral is low. Also, forex trading is more profitable as it offers high returns.
Also watch my full strategy video:
There are 11 forex pairs or more that you can choose from to trade forex with binary options. They are GBP/USD, EUR/USD, AUR/USD, USD/JPY, USD/CHF, EUR/GBP, USD/CAD, AUD/JPY, GBP/JPY, EUR/JPY, and USD/MNX.
One of the strongest currency pairs among the available options is EUR/USD. You can trade this pair for making more profit.
But what is the trading time for EUR/USD? Or what strategy can you use for trading this currency pair? The answers to these questions are in this guide.
How does Forex trading work?
There are a few important aspects of forex trading that you must know before starting your trade.
- In the currency pair, the first currency is called the base currency, and the second one is called the quote currency. For example, in EUR/USD, EUR is the base currency, and USD is the quote currency.
- The trading chart for currency pairs shows the movement of base currency with respect to the quote currency.
- In the currency pairs, the first currency has a value of one. For example, if the value of EUR/USD is 1.11, you can conclude that there are 1.11 US dollars to one euro.
Unlike other assets, you can trade currency pairs 24 hours because a global network of banks operates it. Also, forex trading has three different types of markets, i.e., spot forex market, futures forex market, and forward forex market.
Moreover, the movement of prices of currency pairs is calculated in pips. Here, a pip represents percentage in points.
Why should you trade EUR/USD with Binary Options?
EUR/USD is the most traded currency pair, and it is also included in “The Major” group that has all the popular currency pairs from around the globe.
The different trading time frame of the EUR/USD system makes it a reliable option. Since this currency pair is available to trade all day long, it has good liquidity. And better liquidity results in good pricing.
For successfully trading EUR/USD pair, you can either use the High/Low or Touch/No Touch binary options. Also, you can register yourself with IQ Option, RaceOption, or Quotex to get higher returns by trading this currency pair.
Why should you not trade EUR/USD?
Just like other assets, this trading pair also has certain limitations. Here are a few of them.
- EUR/USD is a highly volatile currency pair because it is traded the most. The high level of volatility can convert a winning trade into a losing trade. Even if you have a good understanding of the forex market, it’s hard to predict the speed at which the price of EUR/USD swings.
- If you like trading on margins for gaining more profits, you should also be ready to face losses.
- EUR/USD does not entirely follow the trend.
Trading time for EUR/USD
It’s essential to trade the strongest currency pair at the right time to gain more profit.
European Forex Session (07.00-16.30 UTC)
Before 10:00UTC, the trading movement of the currency pair depends on the Asian traders as they fix profit and loss at the end of their trade. Also, before the market opens in America, the price slightly decreases.
Europe America Session (13.30-16.30 UTC)
During this time, important news related to currency pairs is released in the US. This thing can either bring down the market or can strengthen it. Moreover, American traders make around 60%-70% of total trade.
America (13.30-20.00 UTC)
During this period, the dollar is strengthened because the currency moves from Euro to Dollar.
Asia (20.00-07.00 UTC)
The EUR turnover falls during this period. Thus, traders remain outside the market and wait for the market to reopen in Europe to rise again.
Trading strategy for EUR/USD
Here are a few strategies that traders can follow for earning huge profits by trading EUR/USD pairs.
(Risk warning: Your capital can be at risk)
Once you know how EUR/USD pair works, you can choose the right time for its trading. You can either choose 5-minute trading, 30-minute trading, weekly, or all-day trading.
Although you can do forex trading throughout the day, you should not do it because it can result in loss. So, you should wait for the EUR/USD pair to get active and then make a trade.
If you choose the wrong time, even your winning trade can convert into a losing trade. The ideal time for trading EUR/USD is 13:00 to 16:00 GMT. During this time, the market of London and New York are open.
Narrow Patten Ranges
You can enter the market during narrow pattern ranges to avoid losing. A narrow price range is created when the currency pair drop or climb and then fall dormant. During a narrow price range, volatility is less.
Follow news trend of European and US Market
You can follow news trends to understand what is happening in the EUR/USD market. When you are up to date with the financial news, you get a better knowledge of whether or not you should trade the currency pair.
Following the news trends will also help you know how the currency pair is performing. Also, you can know when the pair is volatile.
(Risk warning: Your capital can be at risk)
Conclusion: Develop an excellent strategy
While EUR/USD currency pair is one of the strongest pairs, there are a few things that you should consider. That’s because EUR/USD also has certain limitations, and it can result in huge losses.
You must keep an eye on the financial news, select an appropriate time, and develop an excellent strategy to make a winning trade.
Even if you are new to the trading world, you can increase your profitability by understanding the EUR/USD currency pair and using a trusted broker.
Furthermore, see my other strategies.
Frequently asked questions about EUR/USD Binary Options trading strategy:
Why is the EUR/USD pair recommended for Binary Options trading?
The EUR/USD pair is recommended for binary options trading because it is the most traded currency pair, offering good liquidity and pricing. Its popularity and high trading volume make it a relatively safer option with lower volatility compared to other assets, making it suitable for both new and experienced traders.
What are the key trading times for the EUR/USD pair?
Key trading times for the EUR/USD pair include the European Forex Session (07.00-16.30 UTC), Europe America Session (13.30-16.30 UTC), America Session (13.30-20.00 UTC), and Asia Session (20.00-07.00 UTC). The ideal time for trading is between 13:00 to 16:00 GMT when the London and New York markets are open, offering the highest liquidity.
What are the risks of trading EUR/USD in Binary Options?
Despite being a popular choice, the EUR/USD pair can be highly volatile and does not always follow predictable trends. This volatility can quickly turn a winning trade into a losing one, especially during major economic announcements or market shifts. Traders should be cautious, especially when trading on margins.
How can traders develop a successful strategy for trading EUR/USD?
To develop a successful trading strategy for EUR/USD, traders should focus on choosing the right trading times, understanding market patterns, and staying informed about European and US market news trends. It’s also important to trade during periods of lower volatility, like narrow pattern ranges, and to use a reliable broker platform.