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USD/JPY: Trading the Gopher Pair

currency options

Many traders opt for currency when they invest on binary options because of many reasons as what stated above. It is the most the lucrative market to go for. It’s important to have a strong sense of how this options function before investing in them. The following information should be made available to the investors, if they are interested in such market.

 
Unlike any other type, currencies are traded in pairs. You always need to compare one monetary unit with another to make a trade possible.  One unit is bought and the other is sold. The concept might be a little confusing for the beginners but it is easier to treat pair as one item. You can make money when they go up or down, which depends on the direction of the price, will go.

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Why choose this pair?

There are many pairs traded such as EUR/USD, GBP/USD, AUD/USD, USD/CHF, USD/CAD and USD/JPY. These currency pairs have high liquidity that represents more than 80% of the total Forex volume. Buying and selling major pairs is quite a profitable strategy that is why they are the most traded pairs in the market. In choosing the best pair it is simply a matter of finding your own personal advantage in the market.

The analysis of the US dollar movement is of vital in dealing major pairs. Those who wish to barter in Asian market, choose Yen pairs, even though the GBP/USD is a more popular pair. The US Dollar-Japanese Yen is a popular pair on Asian session. If you believe the dollar will depreciate, in the wake of the anticipated disappointing data you should choose this pair. USD/JPY pair is also known as the “gopher”. USD which appears in the beginning of the set is called the “base” and JPY which appears later in the pair is called the “counter” or “quote”.

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The heavily traded currencies

The Japan yen is known for yielding a very low interest rate because of its slow domestic growth. With these consistently low interest rates, it made the yen a popular for the carry trade. Traders have borrowed the yen at next to no cost and used it to invest in other higher yielding currencies around the world, pocketing the rate differentials in the process.

Following over 40 years of incredible economic growth of this country, it has become the second largest growth in economy next to US.  It has become the most heavily traded monetary unit in Asia. And Japanese yen is the third after the US dollar and the Euro. It is amongst the stronger and more stable in the market. While US dollar is globally acknowledged which almost 90% transactions happening across the globe in all markets had USD as one of the currencies.

For these reasons, the US dollar/Japanese yen pair is heavily traded in the market. USD/JPY is a smooth moving and is ideal for beginners in trading. It tends to move up and down in nice easy to follow trends. Although it can be one of the slowest moving pairs it is one of the safest ones. It will also have a high order flow which may also give binary options traders, an advantage.

This is a popular currency that has a lower than normal spread, just like the EUR/USD. The movement of this pair is more regulated when compared to other pairs. In general, because of the smooth trending and good profitability the USD/JPY remains one of the most popular currencies. It is definitely an easy pair to barter with in any economic environment. The traders have the opportunity to earn profit in rising as well as falling markets.

Trends that could affect the USD/JPY pair

USD/JPY pair has been influenced by the trend of the carry trade. Exchange rates in US are managed and controlled with the assistance of the Federal Reserve have for several years remained high compared to the Japanese rates.

Japanese yen is sold higher to buy the American dollar which was working out to be more profitable plan.  The practice most recommended for this pair is either day trading or swing trading. This pair tends to have a positive correlation with the USD/CHF and USD/CAD pairs because they all use the US dollar as the base.

Traders should also remember that it is much better to start on small amounts and using stop-loss orders so that your first trade won’t be the last. Once you are ready, sign-up for an account to start trading currency.

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