Friday, November 22nd, 2013 by Tim Lanoue
Perhaps one of the most reliable but not traded assets would be the GBP/USD currency asset. Oftentimes when it comes to trading a currency pair the EUR/USD asset takes the spotlight but if you notice that the EUR/USD is wild someday then maybe you could give the GBP/USD asset a shot. This is just another one of those cases for when the markets aren’t in your favor and why you would want a variety of strategies to utilize to keep a consistent income. The foundation of the strategy is based around the use of fundamental analysis which we will cover below.
For those of you who are unfamiliar with the fundamental analysis technique it is simply the analysis of an assets financial health, new releases and competitive rivals. When using fundamental analysis it is essential that we have access to a financial portal like Google Finance.
GBP/USD Strategy – How to Trade GBP/USD?
One of the ways that we use this strategy is to access our financial portal and keep an eye out for the UK Inflation Letter. The UK Inflation Letter is a letter composed by the Bank of England’s Chairman to the House of Lords about the status of inflation present in the country. This letter will affect the UK economy for many months so if you watch out for it you can place very large trades accordingly that will more than likely work out in your favor.
The second way to trade the GBP/USD would be to wait for the release of UK manufacturing data that is publicized monthly. Now keep in mind that this report is not nearly as significant as the inflation report so the affect it will have on the markets will not be as severe. Now when preparing to trade with these two fundamental analysis tools it is important to realize that we kind of want a trend to develop first to act as a confirmation. So for example, after the press release we see a rapid drop in the price of the GBP/USD asset so we wait a moment or two longer before placing a put trade just to confirm to us that the asset is still heading in that direction. The opposite goes for if the price of the asset is affected positively and the asset’s price presents a strong bullish trend, in this case one must wait a little longer and then place a call trade.
This is a simple to use GBP/USD strategy that does not require the use of technical analysis which is great because we don’t have to watch charts for a prolonged period of time. This is a great strategy to the use if you are interested in trading the GBP/USD currency asset on a binary options platform. If you have any questions or would like to leave a comment.
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