EUR/CHF Trading Tutorial

A currency pair is a price estimate of two currencies. One currency gets used to quote the other. The currency used for the quotation is the quote currency. The second currency that gets quoted is the base currency. Currencies on the forex market get identified by using three-letter symbols. These are the letters associated with the currency. For example, the Euro gets represented as EUR, especially on the forex market. The Swiss Franc gets represented as CHF.

When these currencies get paired, they get presented as EUR/CHF. The EUR is the transactional currency, on the other hand, the CHF is the quoted currency. The Swiss Franc is the official legal tender of Switzerland and Liechtenstein. It was issued as the official currency in 1850. The Euro was first introduced in 1999 primarily to be digital currency and circulated as coins and banknotes later in 2002. 

Factors Influencing the EUR/CHF Trading Market

The EUR/CHF is very popular in the forex market as a cross-currency pair. This means that the two currencies can get traded against each other. The CHF has more history than the EUR.

Most traders see the EUR/CHF as a substitute currency pair. This is because the two currencies hedge against each other, especially in the open forex market. The value of CHF falls more than the EUR when there is a high-risk market. When the risk gets averted, the CHF rises more than the EUR.

The EUR/CHF price action is smaller than most other currency pairs. This makes the EUR/CHF currency pair less volatile. Long and short-term positions can get placed on the EUR/CHF.

The main factors influencing trading EUR/CHF are the geopolitical and economic factors. The interest rate of the EUR gets affected by the European Central Bank. 

In line with this, the interest rate of the CHF gets determined and influenced by the Swiss National Bank. This gets seen from an economic point of view.

The strength of the EUR gets determined by the European Central Bank. This bank publishes a monthly report on the economic value of the Eurozone.

This monthly report is significant to forex traders. This is because this report influences the price value of the EUR.

The Eurozone’s unemployment records also strengthen the EUR. Imports and exports also enhance it.

The uncertainty of Europe’s economy can cause a rise in the Swiss Franc. This causes a fall in the Euro.

The uncertainty of the economy of Switzerland can also cause a rise in the price value of the Euro. This causes the Swiss Franc value to depreciate.

40% of the Swiss Franc gets fortified by gold reserves. This currency gets regarded as a “Safe Haven” for traders on the forex market.

A slight change in the political economy of Europe can cause a fall in the price value of the Euro. It also causes a rise in the price value of the Swiss Franc.

A minor change in the political economy of Switzerland can also cause a fall. Especially in the Swiss franc price value. This makes the price value of the Euro appreciate.

The US dollar also plays a vital role in the price fluctuations of the EUR/CHF. This is because the US dollar is a dominant currency. It also influences 90% of transactions made on currency pairs. The economy of the US is the largest globally. This is another reason why it affects all currency transactions.

The rising and falling of the United States dollar affect many countries. The EUR/CHF has a solid link to the US dollar. 

This is because of the US dollar’s economic ties with Switzerland and the Eurozone. The CHF rises against the EUR when the Eurozone experiences volatility.

Trading EUR/CHF on the Market

The “buy” trade option gets placed when the value of the CHF gets predicted to rise against the EUR. The “sell” option gets set when the value of the CHF gets predicted to fall. That is, the EUR gets predicted to rise.

The price fluctuation of the EUR/CHF is usually gradual in the downtrends. This means that it is more gradual in the uptrends. 

The exchange rate of the EUR/CHF can be dominant for an extended period of time. This currency pair tests a technical area many times before falling or rising.

The resistance and support areas work well when used on EUR/CHF trades. That is, using horizontal highs and lows. The sloping trendlines are also used when trading EUR/CHF. That is, the falling or rising trendlines.

The EUR/CHF rises when it breaks out of the resistance or support zones. This offers successful results when trading EUR/CHF. One of the common patterns of the EUR/CHF market is that the pair reach round numbers and reverse at that point.

These round numbers act as resistance or support zones for different currency pairs. However, the study shows that these rounded numbers get seen more on the EUR/CHF charts. That is, compared to other currency pairs.

Risk due to market volatility can get avoided when trading EUR/CHF. This gets done by using the risk management tools. That is, stop loss and take profit. The stop loss margin gets placed to close a trade when it gets to a specific limit.    

Losses made when trading EUR/CHF can also get avoided. This gets done by monitoring the economic fundamentals of the three countries. These countries affect this currency pair. That is, the American, European, and Swiss economies.

Strategies for long-term positions are dependent on the entry points. Especially the entry points close to the support trendlines on the chart.

Strategies for the short-term positions are dependent on the scalping breakouts—especially those under the support areas that lead to a shift in the bearish downward trend.

The EUR/CHF Trading Relationship

It is no news that the EUR/CHF pair is one the most traded currency pair in the foreign exchange market. There is so much volume and noticeable market movement whenever there are trades that involves the two currency pairs. It inevitably opens up numerous opportunities for investors and traders to make great profit. 

The EUR/CHF has a positive correlation with two other currency pairs which are — EUR/USD and the USD/CHF. These two currency pairs drive the EUR/CHF. Although, as a trader or investor, arbitraraging the currencies in order to capture the difference in interest does not work out in most cases. 

The US dollar is a predominant currency which is mixed in almost 90% of every currency transactions in the forex market. The economy of the United States is also the largest economy in the world, this implies that the strength or weakness of its economy affects various other nations. 

The notable correlation between the USD/CHF and EUR/USD is a partly a result of the US dollar being a common factor here among the currency pairs. Consequently, the EUR/CHF bilateral relationship is much stronger because of the closer connections between Switzerland and the Eurozone.

Trading Hours for the EUR/CHF

Forex currency pairs can get traded 24/7 and five days a week. They get traded from Mondays to Fridays. Trades are not usually conducted during the weekend. Only special trading sessions get conducted during the weekend.

There are specific trading hours for each currency pair. This is the time when the currency pair will be more available. It is usually at the start of the market.

The best time to trade the EUR/CHF is 8:30 to 15:30 GMT. This is the best time when the market is less risky. And your capital is at less risk.

There is a high EUR/CHF liquidity level during this time interval. This is because the spread is narrow during this time interval, and EUR/CHF trades can get placed at the desired level.

Trading Session for the EUR/CHF

The forex market is more active when trading hours overlap between sessions. This is when there is an increased number of traders online.

There are three trading sessions of the forex market. They are the Asian, European, and North American Sessions.

They can also get called the Tokyo, London, and New York sessions.

The major market of the Asian session is Tokyo and Sydney. The trading hours for Tokyo are from 11 pm to 8 am GMT. The trading hours for Sydney are from 10 pm to 5 am GMT.

The primary market of the North American session is New York. The trading hours are from noon to 8 pm GMT.

The major market of the European Session is London. The trading hours are from 7 am to 4 pm GMT.

The EUR/CHF is best traded when the London and New York markets overlap and are open. The EUR/CHF gets traded during the London Trading Session.

The London or European Trading Session

This is the second session to start the forex trade: it opens after the Asian session closes. The London Trading session consists of a variety of major financial markets. It is the primary market for the European Session.

The trading time frame for this session can overlap with the New York session. Trading time gets stretched due to the volatility of the market. This session is open from 7 am to 4 pm GMT.

Using the Risk Management Tools on EUR/CHF Trades

The risk management tools in the forex market are the stop loss and the take profit. Traders need to understand the forex market. Before trading on currency pairs like the EUR/CHF, this should get done.

The closing position of your trade must be higher than the opening position. This is to enjoy a “buy” trade placed on EUR/CHF.

The closing position of your trade must be lower than the opening position. This is to enjoy a “sell” trade placed on EUR/CHF.

The difference between an open and closed position is the profit made from trading EUR/CHF. Then it is multiplied by the number of units invested in EUR/CHF.

The use of the risk management tools depends on the brokerage platform used. A good broker offers the stop-loss and take-profit option for every trade made.

The stop loss ends an open EUR/CHF trade when it gets to a specific limit. This helps the trader take his profits and mitigates potential risks.

Choosing a Good Broker for EUR/CHF Trades

Choosing a good and reputable broker is one of the essential factors in making good trades. A good broker offers daily market analysis and reviews. They also provide risk management tools like taking profit and the stop loss.

These features make trade easier and more profit-oriented for traders. Some brokers offer the use of high-end and reliable software like the MT4 and MT5 for trades. These trades can get executed with ease through their platform.

Other brokers have software where forex trading of currency pairs can get executed. This helps traders gain a better oversight of the market.

These platforms also offer an accessible environment for both experienced and inexperienced traders. Traders are provided a demo account where they can practice trading. This gets done to help traders understand how to use different trading strategies.

Here are some top tips to help you in selecting the right broker to trade EUR/CHF

Proper Regulation

One of the most important things to look out for when choosing a broker is regulatory compliance. Beyond the flashy website and easy-to-navigate platform, it is important to work with a broker that is properly regulated with regulatory bodies such as ASIC, FCA, CIMA Cayman and the likes. 

This increases the credibility and integrity of the broker. It also gives investors and other forex traders the confidence that their funds are secure. 

Deposit and Withdrawal Process

A number of brokers have a lot of hidden charges which could come in form of high deposit or withdrawal fees. You should also find out what the deposit and withdrawal policies are. What payment options are available and how convenient is it? These are some questions that should be answered before choosing a broker. 

Demo Account

While a good number of broker mostly provide demo accounts for their trader, some do not. The importance of a demo account cannot be over emphasized especially for new trader. It helps you to get a better understanding of how to execute trades and how the market works geneally before funding your live account. If you are beginner in forex trading, it is advisable that you choose a broker that provides traders with demo account. 

That said, here are some top brokers to trade the EUR/CHF with: 

RoboForex

Roboforex is one of top brokerage firms online. The company was founded in 2009 and is present in about 169 countries. They provide various services to the financial market in these countries. There are over 3.5 million users on the RoboForex platform. It is a highly reputable partner and well respected by experts in the financial market. 

They are also well regulated by the Financial Service Commission in Belize and Cyprus Securities and Exchnage Commissions in Europe (CySEC). RoboForex has also won a good number of prestigious awards. 

One of the advantages of choosing RoboForex as a broker is that the trading conditions offered on this platform are quite favourable there is the option for a minimum deposit. They also have a unique investment option for traders called CopyFX. In addition, forex traders can withdrawal instantly, the means easy access to their funds and no delay of any form. 

While every forex broker has its advantages, there are undoubtedly disadvantages as well. RoboForex requires that traders pay a minimum deposit of $10 before starting out. Also, They offer a small range of currency pairs. There are only 36 currency pairs available to traders. 

For beginners, there are also educational materials, courses, and webinars made available to see you through—all on the company’s website. New traders can also use the demo account to practice as much as possible before launching their live accounts with real funds.

Capital.com

Capital.com was established in 2016 in the United Kingdom. It was started by a team of bankers and software developers. They are regulated by several regulatory bodies in different parts of the world including the Financial Conduct Authority (FCA) in the United Kingdom. 

They set up a special method for processing transactions, leveraging this unique method, they are able to improve the efficiency of the market and it also allows them provide commission free trading. 

Traders only have to pay for the buy-sell spread fee as well as the overnight fees when trading with this leverage. Traders from different parts of the world can choose Capital.com as their broker as they are available in various countries of the world including United Kingdom, India, Germany, Netherlands and others. 

However, they are not present in countries like the United States, Belgium, Taiwan and a couple of other countries. 

They also provide great support to their trader through their customer support system. Capital.com offers about 138 major and minor currency pairs for traders to choose from which is quite a range of options. TRaders are required to pay deposit a minimum of $20 to start up their account. 

The spreads on Capital.com are quite dynamic as they change with changes in the forex market. If there is one thing traders would benefit from choosing Capital.com, it is the fact that their interface is user-friendly. It is pretty easy to navigate the platform and executing trades as the platform is easy, fast and smooth. This makes it a good option for both intermediate traders and beginners. 

When it comes to payment options, Capital.com provide a range of options to traders who use the platform. Traders can choose bank transfer option using a credit card or a debit card, Webmoney, ApplePay, QIWI, iDeal, e-wallets and Giropay. 

They create extra security by having different bank accounts for clients and brokers. Traders are also not required to pay withdrawal fees.

Conclusion

Currencies traded in pairs are either strong or weaker when compared. The currency pair EUR/CHF is very popular among forex market traders.

It got ranked as the 25th most traded currency pair in the forex market. It also consists of a 9% daily added volume. In addition, it is believed that these currency pairs have a strong correlation with each other.

The CHF is also called the safe-haven currency. It has been a trade option for investors seeking risk reduction. The Swiss Franc acted as a safe haven for traders following the 2008 global debt crisis.

The exchange rate of EUR/CHF fell from 1.5447 to 1.2400 in 2009. It was almost a 20% fall in the price value of the Euro against the Swiss Franc. This resulted from the high demand for Franc to get used as insurance in the presence of global uncertainty.

The Swiss Franc and the Euro are more correlated as they are the legal currency of two close countries. They both also have similarities in their economy.

EUR/CHF can get traded in rising channels as these trend lines provide good entry points. The break of a rising trendline is a solid and good bearish signal for the EUR/CHF.

The EUR/CHF can return to a broken support level to retest it. This may be a better chance to sell while setting a stop loss margin.

Every currency pair has its best time to get traded. That is a time with high liquidity and less volatility. This is usually at the start of the market session. Each currency gets traded under a particular trading session depending on the region.

Some trading sessions get stretched to the major financial market participants. The London Session is one of the stretched trading sessions from 7 am to 4 pm GMT.

Forex markets get closed down during the weekends, and only special sessions can be conducted. The forex market is only open from Monday to Friday.

It is also necessary to know the particular Trading hour for each currency pair. For example, the EUR/CHF is best traded from 8:30 to 15:30 GMT. The currency pair experiences a very narrow spread at that time. Traders can also place trades at their desired levels.

Frequently Asked Questions