Exploring New Currency Pairs

Exploring New Currency Pairs

Venturing beyond major currency pairs like EUR/USD and USD/JPY can open up new opportunities for beginner and experienced Forex traders alike. Let’s get started with the most important factors to note when analysing and trading less common currency pairs.

Quick heads up: These less commonly traded currency pairs are known as exotic currency pairs.

Why Explore New Currency Pairs?
A good question to kick us off! There are many great reasons to explore new currency pairs, but let’s start with our top 3 potential benefits.

1. Diversification
When Forex traders trade a variety of currency pairs, it allows them to spread their risk rather than pin all their risk onto trading one or two pairs.

2. Potential for Higher Returns
Trading exotic currency pairs can lead to higher profits because they tend to have bigger and more frequent price changes. Traders can then make the most of this volatility!

3. A Broader Market Understanding
Learning will always be big for us at RCG Markets – and we believe that when you’re ready, learning from experience is priceless. Exploring new currency pairs opens the door to seeing the bigger picture when it comes to the markets. This helps traders gain important insights into global economic trends and geopolitical events.

Getting Started with Analysing New Currency Pairs

Knowledge is Power(ful)
As always, research and education are key for every Forex trader looking to grow. Put time aside to learn about the economies behind the new currency pairs you’re wanting to trade, including key economic indicators and unique influencing factors. For your research, think about looking to books, podcasts, lessons from successful RCG Royal Circle traders, and other reputable sources. Plus, don’t forget to check out our social channels for useful daily info and inspiration.

Fundamental Analysis
It's also important to focus on economic indicators, central bank policies, and political stability. For example, New Zealand's currency is influenced by agricultural exports, while Canadian currency is affected by oil prices. It’s critical to understand these key influences on every currency you’re interested in trading.

Technical Analysis
It is always useful to refer to price charts and indicators like support and resistance levels, moving averages, and the Relative Strength Index (RSI) to get an idea of what future price movements could look like.

Risk Management
In Forex, every new undertaking calls for better understanding and managing your risk to protect your hard-earned capital. Consider implementing the below strategies to better manage your risk:
• Adjust position sizing based on your account balance and risk tolerance.
• Use stop-loss orders to limit potential losses.
• Spread investments across multiple pairs for diversification.
• Stay in the know by following global economic news and events.
• Start small by beginning with small positions when trading a new currency pair.
• Continue to boost your Forex education and refine your trading strategies based on what you learn from exploring new currency pairs.