AUD And The Forex Trading Mindset


Forex investments can provide a welcomed measure of international diversification to most investment portfolios that many other investment venues cannot provide. This is because, as a capital market, forex is one of the largest and most diversified in the world. At present, over 80 currency pairs are traded, ranging from the expected (i. e., the euro, ISO code “EUR”) to the unexpected (e. g., NGN/EUR – the Nigerian naira juxtaposed against the European Union’s euro). Diversification in duration is also a key feature. Forex trades can range from 1 minute to 1 year. In addition, unlike many other capital markets, accounts with very high leverage ratios may be offered. This means, among other things, that you can capture a profit rather quickly.

Specialising in the Australian dollar (ISO code “AUD”) is of merit. The AUD is now an International Monetary Fund reserve currency and trading in the AUD now represents the 5th largest forex liquidity pool. Due to its antipodean tendencies, investing in the AUD represents an unique opportunity.

Why Become Involved In Forex Trading The Australian Dollar?

There are quite a number of reasons why trading in the AUD is a good idea. First, it is not a “northern latitude” currency (such as the EUD, GBP or CHF) and, as such, an AUD-related investment may provide a measure of diversification that cannot be acquired otherwise. Secondly, the AUD is surrounded by forces that bear little resemblance to the influences that impinge on EUR-, GBP- or CHF-related currency pairs. For instance, if the “Shanghai Comp” catches a cold, it usually takes less than one hour for the AUD to catch the flu. Thirdly, since Australia always opens up for business before Europe and North America, the AUD is a little bit like a canary in a coal mine.

Which Qualities Make A Good Forex Trader?

Expert forex traders are usually self-made men. They may come from many different backgrounds, but it’s relatively astounding how much they share similar characteristics. All specialise. All are patient. All are very meticulous in their preparation and follow-through. All are more interested in the average percentage gained vs. average drawdown (rather than a profit number). All learn from their mistakes. In addition, they rarely trade forex through major national holidays or the last two weeks of the calendar year. This is done because they are not only concerned about low liquidity, but also because they have learned the value of taking a break. Many of them use this “time out” to study their prior trades, trying to perfect their forex skills even further.

Staying Focused When Trading Forex

The way to make money in forex is by specialising. If you are a beginner, spend some time researching the different “major” and “minor” currency pairs and decide which ones you feel most comfortable with. Then, use a “demo account” (that any major bank or broker can provide you via the internet) and start testing your forex trading strategies on whatever pair(s) you particularly favour. Learn during which times zones there is great volatility (and when there is not). Learn who can push the pair around (e. g., a central bank) and which announcements affect the pair the most. Figure out what other pairs are directly linked to the pair that interests you the most (e. g., the AUD/JPY and USD/JPY).


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