AUD/USD Trading Strategy: Need-to-Know Before Start Trading

AUD/USD Trading Strategy: Need-to-Know Before Start Trading

Among all the exchangeable currency pairs, the AUD/USD pair is one of the most interesting on the Forex market, so do not hesitate to invest in this direction. In this article, we will explain the popularity of this currency pair, the most driving factors that influence their rates, and the AUD/USD trading strategy that can bring you decent profits.

Why is the AUD/USD currency pair so popular?

The AUD/USD Forex currency pair is one of the most popular trading options on the Forex market. It is not thanks to some extraordinary results of the Australian economy or the country’s size, which is not so immense anyway. The Australian dollar’s popularity as a trading currency takes an important place because of Australia’s commodity market that takes a prominent place among countries like China or the United States.

This Australian dollar’s excellence is also based on China’s needs for the commodity goods that they satisfy by exporting them from Australia. Nearly the third part of Australian commodity goods are exported to China.

Australia is abundant in nickel, iron, gold, and coal. The mining sector represents five percent of the GDP, while 12% of the GDP comes from agriculture. Thanks to the exploitation of these commodities and exports to China, you should pay attention to price fluctuations that impact AUD/USD currency pairs’ volatility.

The central banks control most of the major currencies worldwide. In the case of the Australian dollar, it is controlled by the conservative institution called the Reserve Bank of Australia, which also governs the currency’s interest rate. However, it doesn’t behave as an interventionist in terms of controlling the currency market. Fluctuations of the good commodity prices often represent a challenge for Australia’s reserve bank since it leads to the uncertainty of the country’s trading balance’s unpredictability.

Important factors that influence AUD/USD currency pair trading

Be aware that all of these economic factors are likely to impact the AUD/USD conversion rate. Following Trading Economic Calendar announcements is popular among Forex traders allowing and can help you collect all the necessary currency trend data needed to perform the successful trade of AUD/USD pairs. So, the important factors worth following when it comes to the AUD/USD currency pair include:

  • Central bank interest rates (FED and RBA)
  • FED and RBA press conferences news
  • CPI inflation rate (Consumer Price Indices)
  • GDP growth rate (Gross Domestic Product)
  • Retail sales
  • Commodity good prices
  • Market sentiment
  • Consumer confidence

What are the different trading methods for this AUD/USD currency pair?

Let’s see the best AUD/USD trading strategies available for the AUD/USD currency pair. There is no one fit all strategy. Here are the most important ones, but you will choose your AUD/USD trading strategy according to your personality, preferences, and plans.

1. AUD/USD scalping

The scalping technique comprises of fast trading, which takes place in 5 minutes at most. If you like dynamic trading, then this method is for you. What is interesting about this method is the large number of opportunities available. However, know that your earnings will be small. The accumulation of these makes you win large sums. That is why the utmost caution is advisable. This is because often if the gains are large then  so are the losses.

2.Day Trading AUD/USD

The second method is day trading, and as its name suggests, it is available for the whole day. It closes at the end of the day and looks slightly like the previous method. Still, here the trading time is longer; you can trade over periods of 15 to 30 minutes so three times or six times longer than scalping, which will reduce the risk of loss and the number of positions taken.

3. Swing Trading

Finally, we come to the third method, which is Swing Trading; this technique, on the other hand, exceeds one day and continues on up to several days or even several weeks. This method is therefore recommended for people who are interested in trading in currencies but cannot be available all day. The gains are significant because they are long term.

General tips for trading the AUD/USD currency pair

As we have already explained, trading or exchanging the AUD/USD currency pair is very interesting, but there are many steps to understand and follow. Monitoring the commodity market of both Australian and Chinese is crucial since their economies are tightly linked.

It is also important to go for a reliable and honest broker. It would help if you started by reading brokers’ reviews to see which are regulated and not. Do your research on the web about top brokers before committing.

We strongly recommend training yourself to be capable of reading the data and market indicators. And be up to date on everything related to currency volatility.