Choosing a currency pair that is in the same region can be a very good idea or trouble depending on the day. It might sound like a contradiction and be completely wrong in your mind, but take a look at how you trade forex. You trade in the foreign exchange market based on news, data reports and events. The point is on any given day anything can happen. Some days the market can be in favour of a pair like the CZK/EUR and on another day issues in Eastern and Western Europe might make it too volatile to trade. As long as you understand that the world is ever changing and that means forex pairs will change then you have made the first step towards trading with success.
Trade Forex Based on Czech Details
It is best to look at both countries in terms of some specific information that can impact trade. One of the things you need to learn about a currency is whether it has a surplus or deficit. You also want to know the export and import industry of the country. To trade forex successfully with CZK/EUR pairing, you need to realise the Czech Republic has a deficit. They are ranked at 171 out of 190. To give you an idea of where this puts them- the U.S. is ranked 190 out of 190. The Czech Republic has a slightly better deficit.
In terms of exports the Czech Republic sends out raw materials, chemicals, fuels, and transportation equipment. Imports include transportation equipment, machinery, chemicals and fuels. Note that these are just a few of the things they export or import. When you trade forex you want to keep an eye on these industries to see if there will be any activity for the pair such as a gain in CZK or the Czech Koruna due to increased trade activity. Trade is mostly with the European Union, which is another reason you might want to use the CZK/EUR pair for trading.
Trade Forex: EUR Details
The Euro is currency for the Eurozone, which is not the European Union. Yet, many countries in the Eurozone are also in the E.U. Germany, France, and Italy are three countries that have a lot of impact on the Euro, so you definitely need to understand what these countries export and import. Furthermore, Germany is ranked 3 out of 190 with a trade surplus and France and Italy have a larger debt than the Czech Republic.
On any given day reports from any of these three countries could affect your forex pair. If you trade forex such as the CZK/EUR you would want to see what reports are coming out from these three countries compared to any report from the Czech Republic. If there are data reports coming out from all then you need to decide if the CZK will trade up or down based on the Eurozone reports. Whenever you trade forex pairs these are considerations to make. In this instance you are looking at a specific pair.
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