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✅TRADING ONE PAIR ONLY✅ “TO TRADE, OR NOT TO TRADE A SINGLE CURRENCY PAIR. THAT IS THE QUESTION…” 🧿MULTIPLE CURRENCY PAIRS Easier to recover from losses on a given currency pair Less likely to experience not seeing any setups for a whole day/week Better understanding of pair correlations required Can be more distracting 🧿SINGLE CURRENCY PAIR No risk of trading correlated pairs Better ability to focus Feeling of understanding the price movements more Can be a struggle to stick to ONE pair Feeling of missing out when big moves happen on other pairs ✅HOW TO TRADE SINGLE CURRENCY PAIR: 🔲Step 1: Pick Your Currency Pair ▪️Is the pair active when I intend to trade it? Even though the Foreign Exchange market is open 24/5, some pairs may be less traded at some specific times. Refer to "When To Trade Forex To Maximize Your Lifestyle & Profit?" ▪️Do you understand the currency pair you want to trade? If you trade a pair with your country's currency, your chances of understanding how the price of the pair fluctuates might be higher. You will know what's going on and might even be able to know where the currency is heading (we are talking of fundamental analysis here...). ▪️Is the pair too or not enough volatile for you? Don't be surprised to see big swings in GBP/JPY or GBP/NZD because those pairs are considered more volatile. Some traders like it because the profits usually come quickly, but stopped out trades can be more frequent.On the other hand, a pair like USD/CNY will have some inactivity periods and that might be frustrating. 🔲Step 2: Plan Your Trading Good strategies are abstract and should work on any currency pair, however, since you have decided to trade one pair only, you have the privilege of tailoring you strategy to the particular pair, taking into the account it’s volatility, average likelihood of fakeouts vs breakouts, how trending it is on average etc.. 🔲Step 3: Stay Consistent Stick to the plan for at least a month. You might start the month feeling excited. You might get discouraged because you've taken too many or too few trades two weeks in.No one cares. Stick to your decision.At the end of the month, two things will happen: 1. You'll have built more confidence in your ability to remain consistent. 2. You'll have performed an experiment and will be able to say what works vs. what doesn't. Those are two great things for someone who's looking to grow as a Forex trader. Thanks for reading bro, you are the best☺️ ✅Gimme a like and the Gods of Trading will favour you this week👍 Dear followers, let me know, what topic interests you for new educational posts?
OANDA:BTCUSDEducation
by SignalProvider
10
🔳TOP 7 INDICATORS TO USE🔳 ◻️MACD(Moving Average Convergence/Divergence) Traders use MACD to identify changes in the direction or strength of the asset’s price trend. MACD can seem complicated at first glance, because it relies on additional statistical concepts such as the exponential moving average (EMA). But fundamentally, MACD helps traders detect when the recent momentum in an asset’s price may signal a change in its underlying trend. This can help traders decide when to enter, add to, or exit a position.MACD is a lagging indicator. After all, all the data used in MACD is based on the historical price action of the asset. Because it is based on historical data, it must necessarily lag the price. However, some traders use MACD histograms to predict when a change in trend will occur. ◻️VWAP(Volume-Weighted Average Price) The volume-weighted average price (VWAP) is a measurement that shows the average price of a security, adjusted for its volume. It is calculated during a specific trading session by taking the total dollar value of trading in the security and dividing it by the volume of trades. The formula for calculating VWAP is cumulative typical price x volume divided by cumulative volume. VWAP gives traders a smoothed-out indication of a security’s price (adjusted for volume) over time. It is used by institutional traders to ensure that their trades do not move the price of the security they are trying to buy or sell too extremely. ◻️EMA(Exponential Moving Average) An exponential moving average (EMA) is a type of moving average (MA) that places a greater weight and significance on the most recent data points. The exponential moving average is also referred to as the exponentially weighted moving average. An exponentially weighted moving average reacts more significantly to recent price changes than a simple moving average simple moving average (SMA), which applies an equal weight to all observations in the period. ◻️THE FOUR TYPES OF EMA: ▪️9-EMA is use for short term trading ▪️21-EMA is used for day trading ▪️50-EMA is used for analysis ▪️200-EMA is used for long term view ◻️RSI(Relative Strength Index) The relative strength index (RSI) is a momentum indicator used in technical analysis. RSI measures the speed and magnitude of a security's recent price changes to evaluate overvalued or undervalued conditions in the price of that security. The RSI is displayed as an oscillator (a line graph) on a scale of zero to 100.Generally, when the RSI indicator crosses 30 on the RSI chart, it is a bullish sign and when it crosses 70, it is a bearish sign. Put another way, one can interpret that RSI values of 70 or above indicate that a security is becoming overbought or overvalued. It may be primed for a trend reversal or corrective price pullback. An RSI reading of 30 or below indicates an oversold or undervalued condition. Overbought refers to a security that trades at a price level above its true (or intrinsic) value. That means that it's priced above where it should be, according to practitioners of either technical analysis or fundamental analysis. Traders who see indications that a security is overbought may expect a price correction or trend reversal. Therefore, they may sell the security. Thanks for reading bro, you are the best☺️ ✅Gimme a like and the Gods of Trading will favour you this week👍 Dear followers, let me know, what topic interests you for new educational posts?
OANDA:BTCUSDEducation
by SignalProvider
6
✳️TOP 3 RARE CHART PATTERNS✳️ 📉CUP AND HANDLE PATTERN A cup and handle is a technical chart pattern that resembles a cup and handle where the cup is in the shape of a "u" and the handle has a slight downward drift.A cup and handle is considered a bullish signal extending an uptrend, and it is used to spot opportunities to go long. Technical traders using this indicator should place a stop buy order slightly above the upper trendline of the handle part of the pattern. There can be both bullish and bearish Cups and Handles. 📊DIAMOND PATTERN The diamond pattern is a reversal indicator that signals the end of a bullish or bearish trend. It is most commonly found at the top of uptrends but may also form near the bottom of bearish trends. The bullish diamond pattern occurs after a strong downward move in price. It consists of two resistance levels that constrain previous retracements and two support levels that have constrained the downtrend. Also known as the diamond bottom pattern, the bullish diamond pattern signals a buying opportunity. Often it is the precursor for a bullish breakout. The Bearish Diamond Pattern, is the mirror opposite of the bullish one, even though it works on the same logic and it indicates the end of the uptrend. 📈SCALLOP PATTERN A scallop chart pattern is a technical analysis pattern that signals a short-term continuation of a bullish trend. It is created when prices make an upward-sloping curve that resembles the letter J on a price chart. That's why it's sometimes referred to as a J-shaped or J hook pattern. During the scallop formation, prices move higher, retrace, and trade lower for a short period before reaching a new peak. This indicates a short-term weakness of the ongoing uptrend and indecision in the market as to whether the trend will continue or not. But if prices are able to hold above the retracement zone for a while, it implies a strong momentum behind the uptrend and a potential breakout of the resistance level. The pattern is considered complete when you see prices break out above the key resistance level and rally to a new high. Once the upward breakout occurs, it confirms the continuation of the prevailing uptrend and a positive outlook on the market for the near future. There are both bearish and bullish Scallop Patterns and both can be used successfully. 📚FINAL REMARKS: Though these patterns are somewhat rare, it is essential for an advanced trader to know about them and to know how to use them, because that knowledge might provide you the missing piece of the puzzle in a difficult market making the difference between a good day and bad day. Which is all that matters after all. So I recommend you to spend some time and learn about the obscure patterns and to make it your goal to find them or at least look for them to give your brain enough data to let it do it’s pattern recognition learning magic. Thanks for reading bro, you are the best☺️ ✅Gimme a like and the Gods of Trading will favour you this week👍 Dear followers, let me know, what topic interests you for new educational posts?
OANDA:BTCUSDEducation
by SignalProvider
6
Layer 0 Blockchains ExplainedHello everybody. Today i will explain What is Layer Zero Blockchains and How it work and whats the difference betweem L1 and L0 ? Lets go... First take a look at The Scalability Trilemma : the scalability trilemma is a series of trade-offs between decentralization, speed/scalability, and security that one must make when designing a blockchain and constructing rules for its on-chain governance. Centralization = Increased Speed, Decreased Security & Censorship Resistance Decentralization = Decreased Speed, Increased Security & Censorship Resistance It is very difficult , if not impossible, to achieve perfect decentralization without compromising scalability, and vice versa. This is especially true on a monolithic blockchain where all the critical functions like transaction execution, consensus and data availability (the ability to verify that all the data from new blocks has been published) are managed by a single network, increasing the likelihood of congestion and making it much more difficult to scale. A workaround to the scalability trilemma is to delegate the primary responsibility for these 3 functions to different independent blockchains. This design ensures that the execution chain can be optimized for handling high TPS dapps like a DEX or play-to-earn game without worrying about decentralization. A second chain can then be optimized for decentralization and serve as a final consensus layer for the execution chain to enable withdrawals to and anchor its data. When it comes to scalability, layer 0 networks can help blockchain scale by increasing transaction throughput. While transaction speed is typically measured in terms of TPS (transactions per second), transaction throughput looks at the total number of transactions that a network can handle at one time. The Problem with Layer 1s As the demand for Dapps increases and more capital flows into the space to support development, we are beginning to see the growing pains of layer 1 networks as they struggle to meet the needs of developers and end users who have opposing views on whether dapps should prioritize scalability, security or decentralization. Layer 1 networks are built with a monolithic architecture. This means that the execution, consensus and data availability layers are all functioning within a single blockchain network. This stacked design places a strain on the system and results in the need for blockchains to comprise decentralization for security, or scalability for decentralization. In addition, the lack of control over the underlying infrastructure that dapp developers build on top of has also been a cause of much frustration. Rising gas fees on the Ethereum network make all ethereum dapps too expensive to use, while unexpected downtime on the Solana network similarly makes all dapps on Solana also go offline. Dapp developers must also make compromises in how they design their dapps in order to remain compatible with these L1 networks, and lack the ability to explore different consensus mechanisms or to experiment freely with token incentive models because consensus is a primary function of the L1 infrastructure layer. The overdependence on L1’s and difficult tradeoffs imposed by the scalability trilemma can only be remedied by creating a new base infrastructure that empowers developers to launch their own independent blockchains that can be optimized for different aspects of the scalability trilemma. This base infrastructure is called layer 0, and it is the single most important component for helping blockchains and decentralized applications achieve limitless scalability while maintaining the highest possible levels of decentralization and censorship resistance. What is a Layer 0 Blockchain? A layer 0 is a type of protocol that enables developers to launch multiple layer 1 blockchains that can be designed to each serve a specific purpose and cater to 1 or 2 dimensions of the scalability trilemma as opposed to all 3. These L1 networks can also be made to communicate with each other such that the end user can have the experience of using one blockchain while they are in fact using multiple. Layer 0 (L0) networks are equipped with software development tool kits or SDKs that allow developers to launch their own blockchains, known as Layer 1s or L1s or sidechains, that are connected to the L0 mainchain but operate independently. Diffrences Between Layer-0 vs. layer-1 blockchains You can see some main differences between L0 and L1 blockchains in picture below:' I hope you enjoy this Article please share me your opinion in comments. Good Luck...
CRYPTOCAP:BTCEducation
by TraderAmin-KZ
4
✳️FIBONACCI RETRACEMENT LEVELS BASICS(Must Read)✳️ ☸️WHAT ARE FIB RETRACEMENT LEVELS Fibonacci retracement levels are horizontal lines that indicate the possible support and resistance levels where price could potentially reverse direction. The first thing you should know about the Fibonacci tool is that it works best when the market is trending. The idea is to go long on a retracement at a Fibonacci support level when the market is trending UP. And to go short on a retracement at a Fibonacci resistance level when the market is trending DOWN. Fibonacci retracement levels are considered a predictive technical indicator since they attempt to identify where price may be in the future. ☸️FINDING FIB RETRACEMENT LEVELS In order to find these Fibonacci retracement levels, you have to find the recent significant Swing Highs and Swings Lows. Then, for downtrends, click on the Swing High and drag the cursor to the most recent Swing Low. For uptrends, do the opposite. Click on the Swing Low and drag the cursor to the most recent Swing High. ☸️HOW TO USE Once you’ve done that, you will see the following levels appear: 23.6% , 38.2%, 50.0%, 61.8% and 76.4%. (The 50% one is not technically a Fib level but its still used by everyone)The idea is that the price will make a correction that will reverse at one of these levels. So all we need to do is watch the price action near these levels and look for the reversal patterns, like triple bottom, head and shoulders, narrowing wedge breakouts, etc… Once the we see a confluence of the Fib level and the reversal pattern, we can just wait for the confirmation breakout and enter the trade on the pullback. EASY!👻 ☸️WHY IT WORKS Because of all the people who use the Fibonacci tool, those levels become self-fulfilling support and resistance levels. If enough market participants believe that a retracement will occur near a Fibonacci retracement level and are waiting to open a position when the price reaches that level, then all those pending orders will impact the market price. ☸️IMPORANT REMINDER One thing you should take note of is that price won’t always bounce from these levels. They should be looked at as areas of interest so as I wrote above, one can’t simply trade off these levels, but needs to employ reversal patterns with confirmation to increase the probability rate of one’s calls. 💹Thank you for reading, please Like and Comment to support me☺️ Dear followers, let me know, what topic interests you for new educational posts?
OANDA:BTCUSDEducation
by SignalProvider
9
⭕️WHAT IS A FALSE BREAKOUT❓ ⭕️False-breakouts are exactly what they sound like: a breakout that failed to continue beyond a level, resulting in a ‘false’ breakout of that level. False breakout patterns are one of the most important price action trading patterns to learn, because a false-break is often a very strong clue that price might be changing direction or that a trend might be resuming soon. ⭕️A false-break of a level can be thought of as a ‘deception’ by the market, because it looks like price will breakout but then it quickly reverses, deceiving all those who took the ‘bait’ of the breakout. It’s often the case that amateurs will enter what looks like an ‘obvious’ breakout and then the professional’s will push the market back the other way ⭕️A false breakout is essentially a ‘contrarian’ move in the market that ‘flushes’ out those traders who may have entered on emotion, rather than logic and forward thinking. ⭕️Generally speaking, a false-breakout happens because amateur traders or those with ‘weak hands’ in the market will tend to enter the market only when it ‘feels safe’ to do so. This means, they tend to enter when a market is already quite extended in one direction (and it’s about ready to retrace) or they try to ‘predict’ a breakout from a key support or resistance level too early. Professional traders watch for these missteps by the amateurs, and the end result is a very good entry for them with a tight stop loss and huge risk reward potential. ⭕️It takes discipline and a bit of ‘gut feel’ to know when a false-break is likely to occur, and you can never really know ‘for sure’ until after one has formed. The important thing, is to know what they look like and how to trade them. 🛑Which we will discuss in the next article, If you like this one❗️ Dear followers, let me know, what topic interests you for new educational posts?
OANDA:BTCUSDEducation
by SignalProvider
8
HOW TO USE RSI⁉️ ✳️What is the RSI Indicator What is the RSI Indicator? The relative strength index is a market indicator that signals when the asset is over-bought or over-sold. This is a momentum-following indicator that measures how fast the price is moving and changing. The RSI uses different types of averages, but its primary purpose is to show whether a trend is strong or weak within a series of prices. In general, a strong trend is indicated by values close to 100 while a bearish trend is often indicated by a value near 0. ✳️RSI Indicator Settings The RSI has the standard setting. When you activate the indicator in any platform the defualt setting are 3 values. They are 6, 14 and 24. These are averages. The 30 and 70 value lines are calculated based on the lower and upper values and the middle lines is the oscillar which is a 14 period average. When the 14 period oscillator is above the 24 period is overbought and when the 14 period is below the 6 period is oversold. ✳️Opening Positions on RSI Signals The main signal the RSI oscillator generates allows defining overbought and oversold price ranges. Although it is frequently used as a filter in systems where the main indicator is a trend one, it might be possible to try trading using RSI signals only. When indicator’s line goes above the level 70 or below the level 30, it signals that market is overbought/oversold, and it is necessary to wait for the next signal confirming a trend reversal. ✳️RSI Trendlines Contrary to popular belief, the Relative Strength Index (RSI) is a leading indicator. This quality can be observed by using trendlines on the RSI chart and trading its break. When the RSI is rising, an upward trendline is drawn by connecting two or more lows and projecting the line into the future. Similarly, when the RSI is falling, a downward trendline is drawn by connecting two or more highs and projecting the line into the future. A break of an RSI trendline precedes an actual price reversal or continuation in the market. For instance, if the asset price breaks above a downward trendline, it is a signal that the price is about to edge upwards, either as a continuation of an uptrend or as a reversal of an existing downtrend in the market. ✳️RSI and Chart Patterns The Relative Strength Index is one of the best technical indicators to complement raw price action signals delivered by candlestick patterns or line chart patterns. For instance, when a bullish candlestick, such as a pin bar, or a price chart pattern, such as a double bottom, occurs in a downtrend, a buy position can be opened when the RSI displays a reading of below 30 to imply oversold conditions. ✳️RSI Divergence The Relative Strength Index also delivers divergence signals that could be a viable trading opportunity. A divergence occurs when the asset price and RSI do not move in the same direction. A positive (bullish) divergence occurs when the price is drifting lower, but the RSI is edging higher. This is a signal that the price may be heading towards a bottom and an upward reversal is about to happen. On the other hand, a negative (bearish) divergence occurs when the price is drifting higher, but the RSI is going lower. This is a signal that price may be heading towards a top and a downward reversal is about to happen. ✳️RSI and RVI Both the RSI and the RVI(Relative Vigor Index) are oscillators, but their different qualities can help traders to pick out high-quality RSI trading opportunities in the market. Whereas the RSI focuses on price extremes (high and low), the computation of RVI seeks to relate closing prices to open prices. This means that the RVI has both positive and negative numbers, with the centreline being 0. The RVI gives information on the strength of price movement, with positive values indicating increasing momentum, whereas negative values denote decreasing momentum. The RSI is the best indicator to complement or qualify the signals delivered by the RVI, especially in trending markets. For instance, if the market is in an uptrend and the RVI delivers a bearish divergence signal (prices go higher whereas RVI goes lower). In this case, a retracement or a trend reversal will be confirmed if the RSI reading is above 70, which implies overbought trading conditions. ✳️Here is the list, though now at all exhausting of the ways to use RSI in your trading. I will add that I use it myself, even though you don’t see it on my charts for aesthetic reasons. I hope you liked my article, so please like and comment bros, so that more people could see it!👍 See ya next time♻️
OANDA:BTCUSDEducation
by SignalProvider
7
❗️THE BIGGEST LIE ABOUT RISK REWARD RATIO❗️ What is risk-reward ratio — and the biggest lie you’ve been told: 📚The risk-reward ratio (or risk return ratio) measures how much your potential reward (or return) is, for every dollar you risk. 📚For example: If you have a risk-reward ratio of 1:3, it means you’re risking $1 to potentially make $3. If you have a risk-reward ratio of 1:5, it means you’re risking $1 to potentially make $5. You get my point. ⚠️Now, here’s the biggest lie you’ve been told about the risk reward ratio: “You need a minimum of 1:2 risk reward ratio.” This statement is incorrect! Because the risk-reward ratio is meaningless on its own. 📚Here’s an example: Let’s say you have a risk reward ratio of 1:2 (for every trade you win, you make $2). But, your winning rate is 20%. So out of 10 trades, you have 8 losing trades and 2 winners. Let’s do the math… Total Loss = $1 * 8 = -$8 Total Gain = $2 * 2 = $4 Net loss = -$4 By now I hope you understand the risk reward ratio by itself is a meaningless metric. Instead, you must combine your risk-reward ratio with your winning rate to know whether you’ll make money in the long run (otherwise known as your expectancy). 📍THEREFORE: The key to success is the combination of the RR and Win Rate in such a fashion that yields a positive return. 📙Example: 🔘If your RR is 1:1 then you start making money with 51% win rate and above. 🔘If your RR is 1:1,5 then you start making money with 41% Win rate and above. 🔘If your RR is 1:2 then you start making money with 34% win rate and above. 🔴The higher the RR the lower is the breakeven Win Rate! Hope You get the idea, guys. Thanks for your time, see you in the next article😉
BITSTAMP:BTCUSDEducation
by SignalProvider
4
🟢PRICE ACTION SECRETS 🔴Multi-candle patterns are more reliable The more candles a specific pattern contains, the more reliable it usually is. 3 candle patterns are better than single candle patterns. 30 candle patterns are usually better than 3 candle patterns. Patterns like head and shoulders, double and triple tops are among my favorites, exactly because of this reason. They consistently result in higher probability trades, which is what we’re all after. It doesn’t mean that a good pin bar setup won’t work, it just means there’s a higher probability of having these multi-candle setups resulting in a winning trade. 🟠Know where to place your stop loss Knowing where to place an order is just the beginning. Where do you place your stop loss? Fixed pips stop loss levels are hardly a good approach since the market volatility can change and every trade should be looked at within the context of the recent market history. 🟢Always look for confluence This is absolutely one of the most important secrets you have to know about. Confluence is everything. So you’ve found a sweet price action setup. Great! Now make sure it has confluence, meaning that it coincides with other valid signals that support your trading idea. 🔵Tell a story of what happened Every chart tells a story. It might be a story of clear direction or a story of messy back-and-forth battling between buyers and sellers. In a similar way, we can talk about clean price action vs messy price action. It is up to the trader to find the story and better understand what the market might do. 🟣Context is everything Depending on where a price action setup occurs, you should interpret it differently. The same pin bar could be bullish or bearish, depending on if they show up at the bottom of a downtrend or top of an uptrend, respectively. Not all patterns are also worth taking if they are not preceded by the right price action and happen at the levels that are in one way or the other of significance. 🟤Identify key support & resistance zones Support and resistance (or S&R for short) are terms used to denote areas where price reverses at its lowest point (support) and the highest point (resistance) on a chart. Often, these zones are “tested” multiple times as traders look for an increased buyer and seller activity around these levels. It’s important to note that support and resistance are usually not thin lines, but rather zones. 🔴The Bottom Line The price action strategy is one of the most powerful tools for extracting money from the markets with predictability and manageable risks, but only if used correctly. Thank you! Please give a Thumbs UP and Leave Comment👍🏻
BITSTAMP:BTCUSDEducation
by SignalProvider
9
What is the Triple Top Pattern❓ 🟢What is the Triple Top Pattern? A triple top chart pattern is a bearish reversal chart pattern that is formed after an uptrend. This pattern is formed with three peaks above a support level/neckline. The first peak is formed after a strong uptrend and then retrace back to the neckline. The formation of this pattern is completed when the prices move back to the neckline after forming the third peak. When the prices break through the neckline or the support level after forming three peaks then the bearish trend reversal is confirmed. 🟢Trading the Triple Top There are some rules when trading the Triple Top chart pattern. ✔️Firstly one should identify the market phase whether it is in uptrend or downtrend. As the triple top is formed at the end of an uptrend, the prior trend should be an uptrend. ✔️Traders should spot if three rounding tops are forming. ✔️Traders should only enter the short position when the price breaks out from the support level or the neckline. 🟢Stop Loss In the case of a Triple Top chart pattern, the stop loss should be placed at the third top of the pattern. 🟢Price Target The price target should be equal to the distance between the neckline and the tops, also taking into the account the key levels below. Thank you for reading! Please give a Thumbs UP and Leave Comment👍🏻
BITSTAMP:BTCUSDEducation
by SignalProvider
8
🌐What Is the U.S. Dollar Index❓ ✅Why Be Interested? The strong dollar has been getting a lot of attention lately. Some U.S. companies are blaming the strong U.S. dollar for lackluster earnings, while economists say it's helping the Federal Reserve’s ongoing fight against high inflation. But how do you know when the dollar is strong or weak? That’s the job of the U.S. Dollar Index (DXY) ☑️What Is the U.S. Dollar Index? The U.S. Dollar Index is a market index benchmark used to measure the value of the U.S. dollar relative to other widely-traded international currencies. The Federal Reserve established the dollar index in 1973 to track the value of the U.S. dollar. Two years earlier, President Richard Nixon had abandoned the gold standard, which allowed the value of the dollar to float freely in foreign exchange (forex) markets. Since 1985, the dollar index has been calculated and maintained by Intercontinental Exchange (ICE). ☑️The Dollar Index History and Makeup The formula for calculating the value of the U.S. Dollar Index includes the dollar’s relative value compared to a basket of foreign currencies. Initially, it included the Japanese yen, British pound, Canadian dollar, Swedish krona, Swiss franc, West German mark, French franc, Italian lira, Dutch guilder, and Belgian franc. Following the creation of the euro in 1999, the number of currencies was reduced and the formula for the dollar index was adjusted. Today, the basket includes just six currencies: the euro (EUR), Japanese yen (JPY), British pound (GBP), Canadian dollar (CAD), Swedish krona (SEK) and Swiss franc (CHF). ✅How Is the U.S. Dollar Index Used? The USDX allows traders and investors to monitor the purchasing power of the U.S. dollar relative to the six currencies included into the index's basket. Investors also use the dollar index as a litmus test for U.S. economic performance, particularly when it comes to imports and exports. The more goods the U.S. exports, the more international demand there is for U.S. dollars to purchase those goods. When demand for the dollar is high, USDX rises. ☑️Dollar Index Shortcomings: The weightings of the currencies used to calculate the index were based on the United States’ biggest trading partners in the 1970s. As a result, its calculation doesn't include emerging market currencies, like the Mexican Peso (MXN) or commodity currencies. It also doesn't include China’s renminbi (CNY), even though China is now the largest U.S. trading partner by a wide margin. Therefore, the index may be less useful as an economic measure than in previous decades. ✅What Makes the U.S. Dollar Strong? A combination of higher inflation, the Fed's aggressive tightening campaign and a global search for yield have all contributed to the strong dollar. A strong dollar means other global currencies have been relatively weak, which exacerbates inflationary pressures and financial market volatility. 📍In Conclusion: The Dollar Index can be used as a gauge of the Dollar strength or weakness, and it’s futures can be used to profit form Dollar moves without betting on any individual Dollar currency pair which provides diversification. However, the Index is somewhat outdated which needs to be accounted for when using it. Your Like and Comment are the best Thank You😊
Education
by ProSignalsFx
4