How to Trade GBP/USD

Your capital may be at risk. This material is not investment advice.

With the growth of online binary options platforms such as IQ Option, traders in South Africa are now able to actively take part in the trading of international currencies.

IQ Option is an online investment and trading tool that is modelled on the fundamental principle of pure exchange. The principle works on the premise that at any given time, there will always be a trader willing to buy or sell at any given price.

To take part in trading, South African traders must predict whether an underlying asset will either increase or decrease in value. This is done under constrained time limits, and if the prediction is correct, the South African traders get a pre-established return on their original investment.

Trading Currencies

Just like any other underlying asset, currencies can be traded by implementing rigorous analysis of technical and fundamental factors. South African traders can trade a wide variety of international currencies such as GBP, USD, EUR, CAD and NZD.One of the best currency pairs to trade is the GBP-USD.?

Trading GBP/USD

This trade can be carried out under two trade setups:

1.       Based on a news release.

This is brought about by the release of an original news article, which has implications on either the two currencies. For example, the release of the quarterly UK inflation report.

If there is high inflation, this affects the UK economy for a long period following the release. In order to understand the implications of this release on the trading of currencies, you will need to look at the major effects experienced in the previous years.

The effect of the falling British currency has, in turn, caused a corresponding effect in the EU. This means that even if the UK isolates itself from the EU, they will not be able to distance themselves from the problems because the EU is their largest economic partner.

Even if the EU recovers from the current economic shortfall, this will not translate to a favourable report on UK inflation rates. This means that South African traders will have time to decide on trading in options available on their binary platform.

Since high inflation can be used to predict a continued fall of the GBP, it will be advisable to go for a High/Low trade that will give you either a Down, Put or Fall outcome.

2.    Based on monthly manufacturing statistics

This comes about when market and manufacturing statistics are released. This is a very unpredictable report because at times it will favour the GBP, but other times it will not. In this case, it will be important to wait for the actual release before arriving at a decision.

It is highly recommended to try out trading strategies on a demo account before actually implementing them. It is also important to put into practice the top 5 binary options beginner tips to ensure maximum profitability.

To summarise, the top 5 binary options beginner tips are selecting a reputable binary broker, utilising online reading materials, using long-term trades, identifying a suitable strategy and accepting responsibility for whatever outcome you get from your investments.