Greenback Guru: Why You Should Specialize in Trading U.S. Dollars
If you are a currency trader, and focus on trading the major currency pairs—EUR/USD, GBP/USD, USD/CHF, and USD/JPY—then you should consider yourself a specialist. Yes, it’s true! You are a specialist in the U.S. dollar—a “greenback guru” so to speak.
Each currency pair obviously comprises two currencies. If you are long the GBP/USD, then you are actually buying pounds and selling dollars. If you are short the USD/JPY, then you are actually selling dollars and buying yen.
In each of the major currency pairs, the USD is a part of the equation. This means if you study and understand the fundamentals of the U.S. dollar, the U.S. economy, and the inner workings of the U.S. Federal Reserve System, then you’ve done most of the work needed to prepare to trade any of the four major currency pairs.
The so-called majors are the most liquid and widely traded currency pairs in the world. Trades involving the majors make up the vast majority of total forex trading.
Think about it. If the USD is half of every major currency pair, and the majors comprise most of the entire forex market, then your focus on understanding what drives the USD will have a huge impact on nearly all of your future trade plans.
There is also a wonderful benefit of specializing in trading the USD. The U.S. dollar, since the end of World War II, has been the reserve currency of the world. What does that mean? It means that the fate of the ...