EUR/USD Vs EUR/AUD

[PKFFW]

Hi all,

I was wondering your thoughts on which currency pair would be better for a newbie FX trader like me. The EUR/AUD or the EUR/USD?

I know conventional wisdom says "stick to the majors". However,

1: I live in Australia and so have an easier time getting the basics of the fundamental side of things.
2: The ATR on the EUR/AUD hasn't been less than 80 pips a day for the last 4 years, most of the time it is closer to 120 pips or more.
3: I don't think liquidity is an issue although I imagine it is a bit less on the EUR/AUD than the EUR/USD but not enough to make a real difference.
4: My forex broker spread is 3 pips on the EUR/USD and 4 on the EUR/AUD so that may be an issue but is it enough to affect me at this early stage and trading the minimum amounts.
5: Due to work I can trade during the day or evenings most days. The EUR/AUD seems(at first glance without any real study yet) to have more activity during Australian day time than the EUR/USD. Any aussies who know for sure please respond.
6: Not sure which one trends more strongly. This would be the biggest deciding factor for me now as I learn to try to pick up on daily trends. Any knowledgable person with comments on this would be most appreciated.

I want to try to concentrate on one currency pair to begin with. I've got a demo account and am trying things out but would love a bit of advice on where to focus my attention.

Cheers,
PKFFW

 

[Rhody Trader]

If you're comfortable with EUR/AUD, then I say go ahead and trade it. One of the benefits you didn't mention was the fact that sometimes there are USD related factors which dominate the majors across the board to the exclusion of whatever might be going on in regards to the other currency in a given pair (EUR in EUR/USD for example). With EUR/AUD you wouldn't have that to deal with and could focus more on those things specific to the relationship between the EUR and AUD.

 

[grahamc]

PKFFW,

Like you, I've not been trading long and have also been drawn towards EURAUD.
I spread bet and what put me off was the huge spread here of 16 pips (the other company I use don't even list it). So I'm guessing there must be some reason why the SB companies don't like it.
However, at only 3 pips it looks very interesting.

One downside is that because it is not traded as much as USD, there's less knowledge floating around the web. This could be an issue for a newbie.

Be interested to know how you get on.

GC

 

[indexgold]

why does everyone seem to trade the spot market over the futures its 1 pip on the EUR/USD and if you buy at th bid or sell at th offer there is no spread. you only pay commis, and this works out to be half a tick.

 

[neil]

why?

why does everyone seem to trade the spot market over the futures its 1 pip on the EUR/USD and if you buy at th bid or sell at th offer there is no spread. you only pay commis, and this works out to be half a tick.

Because they do not have the small amount of money to open a Futures account with the likes of IB or they did not realise one could trade currency futures with their small spreads.

 

[PKFFW]

PKFFW

Your chosen trading style will have a bearing on what pair works best for you to trade. a few thoughts though.

1) EUR is usually a bigger driver of EURAUD than AUD is. Your local knowledge is good, but may on occasion be drowned out.

2) 4 points, far from being a handicap, is actually a good spread relative to 3 in EUR/USD. To demonstrate how this works, find out what your platform's spread in AUD/USD is as well, then work out a synthetic EURAUD spread from this. Bet it's wider than 4 pts.

3) Trading crosses is a discpline on its own, and isn't the same as trading against the greenback. Doing it well sometimes involves legging into positions (which is very hard for a retail trader to do economically unless they're well capitalised).

Have you considered trading AUD/USD? Your knowledge will be v. useful and, ok, the daily range is smaller and the speed of movement less, but as you're a newbie I think that's a good thing, not a bad one. I've never understood why all these rookies trade cable just because it moves a lot, then wonder why they get wiped out (actually I do understand why - it's because most people are idiots, but that's a different issue).

Good luck.

GJ

Thanks for the thoughts GJ. I'll have a closer look at the AUS/USD for some comparisons.

Cheers,
PKFFW

 

[PKFFW]

why does everyone seem to trade the spot market over the futures its 1 pip on the EUR/USD and if you buy at th bid or sell at th offer there is no spread. you only pay commis, and this works out to be half a tick.

When I do eventually put real money on the line I will be trading in mini lots to begin with at only $1 per pip and less margin required. From what little I know the futures market has a much higher pip value and requires much greater margin. That is why I will be trading the spot market instead. Maybe I am misinformed though.

Cheers,
PKFFW