AUDUSD

AUD/USD Trading

What is the AUD/USD (Australian Dollar/U.S. Dollar) Pair ?

The currency pair shows the reader how much one currency is required to buy one currency unit from another. The Australian Dollar abbreviated as AUD is the reference currency and the USD in this situation.

Dollar (abbreviated USD) is called the currency of the quote, or the denomination in which the quote is given.

History of AUD/USD

The AUD had been replacing the Australian pound. The Australian pound was pegged to Sterling for decades until the 1931 devaluation of the Sterling.

Back in the 1960s, instead of the old imperial system, the country decided to move forward with the Australian Dollar – a decimal currency. There is an economic tie between China and Australia. Australia has a significant trade surplus, is one of the reasons that drive up the AUD.

The partnership continues to play a leading role in the AUD’s rise and fall. The AUD/USD is the fifth most exchanged currency pair but is not one of the six dollar index pairings (USD).

The Australian economy is a major exporter of coal and iron ore. Thus, it is dependent on commodity prices, which is another aspect that influences AUD’s worth.

Understanding the AUD/USD (Australian Dollar/U.S. Dollar)

The abbreviation AUD/USD designates a quote of the rate for which the U. S. Australian Dollars may be traded with. The AUD/USD pair’s value is quoted as 1 Australian dollar per quoted US dollar.

For example, if the pair sells at 0. 75 it means purchasing 1 Australian dollar takes 0. 75 US dollars.

How to trade the AUD/USD currency pair

Thanks to the Australian commodities boom that took place after 2000, the value of the AUD/USD currency pair has risen over the last few years.

A pair of currencies ties two powerful and developing economies. A person can exchange Aussie dollar to the US dollar in pairs. Sometimes, either a forex contract or they can trade a differential contract (CFD) on a single currency pair and bet on the price difference.

You should take either a long position (speculating the price will go up) or a short position (speculating the price will go down). CFDs tend used within a limited time frame, this is a short-term investment or trade.

To exchange the AUDUSD currency pair with CFDs, for example, you gamble on the path of the fundamental asset. When you think the Australian dollar is going to grow so buying CFDs takes a long time. When you think the Australian dollar is going to lose interest to the US dollar so by selling CFDs you will be taking a short profit.

Why Day Trade AUD/USD ?

Why do you have to go for this particular currency pair?

Volatility: Day traders benefit from elevated rates of both volume and uncertainty. There is a high-interest rate gap between Australia and the US. That could mean more chances of making money. The AUDUSD pair runs up much quicker in bull markets than other pairs, and do decline much earlier in bearish market conditions. The Australian dollar has become the highest performing big currency in recent years. It has seen an increase of over 30% compared with the US dollar.

Economic growth – Evidence has indicated a boom in the Australian economy by exports and services. Resource access – Thanks to the number of services available, regular and weekly reporting is much simpler today. Websites and forums offer an overview and analysis of the market.

Drawbacks and Risks of AUD/USD

Amid AUD/USD figures showing positive growth and enticing trends. The dealing of this currency pair also poses some pitfalls and threats. Traders often take the US economy’s power and stability over other economies. Since this is a cross pair, though, you need to make sure that both economies are measured against each other. Failure to stay up to date with political and economic feelings in both could result in costly errors.

Volatility – The prospect of uncertainty is part of the AUD/USD currency pair allure. These sharp moves, however, may also cause major losses. So, if you invest substantial capital into this pair, using an effective money management system is one of the top trading tips.

Risks to leverage – Margin investing helps you to borrow funds to optimize your position. But as this will improve future gains, it can also boost expenses.

Automated competition – You may have attractive bid-ask spreads and all the bar charts and graphs before you in real-time. Today, however, you deal with more advanced trading algorithms than ever. It ensures that it becomes extremely difficult to claim an advantage when you’re investing in a live map.

Best Time to Trade AUD/USD

During Australian working hours and on the successful United States trade hours, the high volume and broad daily movements are apparent. Therefore one should pay attention to day-trading between 00:00 and 02:00 GMT for the highest volatility. The other perfect time for currency pair dealing is 06:00 to 08:00 GMT. On the other hand, the correct time is between 12:00 and 17:00 GMT for much of the trading operation and duration.

To sum up, the AUD/USD is a perfect pair of currencies to day trade. Aside from rich stability and liquidity, the currency yields strong benefits. Another of the seven big currencies, the Australian dollar is. Because of this, the trader would have the knowledge of both the RBC and FED’s fixed interest rates and monetary policy.