GBP/CHF Trading Tutorial

The currency pair is a dual part of the relative value of a currency against another in the exchange market. The currency used as a reference is the quote currency. The quoted currency is the base currency. Currency pairs get written by connecting the currency codes of the two currencies. The codes get connected using a slash, a dash, or a dot. An example of a currency pair is a GBP/CHF.

GBP/CHF is an abbreviation for British Pound Sterling and the Swiss Franc currencies. The GBP/CHF is one of the most popular trades on the forex market. They are a very high pair, and their prices are news resistant. That is, the currency pair is not affected by global occurrences.

The GBP/CHF Currency Pair

This currency pair denotes the price of CHF against the price of GBP. The number of Swiss Francs needed to buy one British Pound Sterling.

For instance, when the current price of GBP CHF is at 1.30. It means that it will cost 1.30 Swiss francs to buy one British Pound Sterling.

It also signifies that the GBP is the base currency and the CHF is the quote currency. The GBP/CHF is well traded across the world.

The GBP is the currency of the United Kingdom. The currency became official when Scotland and England got united in 1707. The GBP got created first in the year 760 as a type of money.

It is one of the earliest currencies created globally as a form of legal tender. It gets used as the official currency in so many countries. British Overseas Territories of South Georgia and The British Antarctic are some examples. The South Sandwich Islands is also an example. Zimbabwe, the Channel Islands, and the Isle of Man.

The GBP is one of the most traded currencies in the forex market. It makes up for 13% of the daily trade volume of the exchange market. The GBP bears the symbol of the pound sign (£), it is also called the “Quid” or the “Sterling”.

It is the fourth most traded currency in the world. It represents the economy of one of the most influential countries in the world.

The CHF is the official currency of Liechtenstein and Switzerland. It means “Confoederatio Helvetica Fran.” Confoederatio Helvetica denotes the Latin name of the Swiss Confederation. Currency traders referred to the CHF as “Swisse.”

The CHF is very popular in the forest market. It is more like a Safe Haven currency. Governments and other investors hold CHF as a shield against market instability.

The CHF is the eighth most traded currency in the world. It represents the economy and growth of one of the most influential countries on earth.

This currency pair has a considerable liquidity ratio. This is because of their high demand in the forex market. GBP/CHF has a mild volatility ratio that is easy to understand. This is because Switzerland and the United Kingdom have similar economies.

They are hardly affected by the economy of the United States. This makes them a good option for every forex trader’s portfolio.

When to Trade GBP/CHF

GBP/CHF is best traded during the London trading hours. The London trading hours are from 8 a.m. to 4 p.m. GMT.

The GBP/CHF will have a high liquidity ratio by this time. Most of the fluctuations in price also take place by this time.

Traders need to make use of analytical and educational resources. This will help to determine the best time to trade GBP/CHF.

The “buy” option can get used when there is a prediction of inflation, especially when released by the Bank of England. This gets done in the hopes of making a profit from the trade.

The “sell” option can get used when there is a prediction about Switzerland. For example, in Switzerland, we signed a financial service agreement with another economy.

GBP/CHF trades are easy, simple, and predictable. This makes them popular among forex traders. The high demand for GBP/CHF results in a low liquidity ratio. This means that traders can sell and buy GBP/CHF at any time.

The GBP/CHF does not have high volatility. Thus profits made in this trade may be little. Traders get advised to watch for price fluctuations and place their trades with care.

The daytime trading strategy used by the daytime traders for placing GBP/CHF trades. This gets done by placing trades based on tiny price fluctuations during the day.

One bad market movement can lead to a trader’s capital loss. Thus traders get advised to have a good exit strategy. This will help to avert or cut loss.

GBP/CHF traders should pay close attention, especially to the market fluctuations and place a stop-loss margin. This will help them to know when to quit a trade.

What role does GBP play? 

The Great British Pound is one the largest reserve currency in the world today. It is also regarded as the most valued European currency as well as the oldest existing currency worldwide.

Anyone who has been trading the foreign exchange market would know that Pound is a highly volatile currency. It used to be quite stable in the past, however, since the Brexit vote in 2016, this perception has changed completely. 

The GBP is controlled by Bank of England. They are in charge of setting up interest rates and monetary policies. These bank interest rates are set every month with target at inflation. 

Bank of England also uses certain tools like quantitative easing in setting these bank rates. The actions of the Bank of England as a great influence on the value and stability of GBP which consequently affects the currency oair GBP/CHF.

What role does CHF play? 

The Swiss Franc (CHF) is Switzerland’s currency. Switzerland is also referred to as the de factor private banking capital of the world. As a result of the well-structured and secured banking sector, Switzerland has become one of the richest countries known in history. 

This accounts for the stability and popularity of the CHF in the financial marketplace globally. The SNB or Swiss National Bank is in charge of creating monetary policies. Traders are therefore advised to payt attention to SNB when trading GBP/CHF. 

This is because even the slightest movement in prices can result in huge profits or losses. You can closely mark the market fundamentals by looking out for timely financial news on UK-Swiss. It will help you as a trader to know what price positions to buy or sell at. 

It also helps to observe correlation pairs as well as commodities. One correlation pair to keep an eye out fo is the CHF/EUR. This is because the GBP/CHF is positively correlated to it. Also gold as a commodity accounts for the bulk of Switzerland’s wealth. As such, the price of gold most definitely affects the behavour of CHF. 

As a trader, you should also have a strong exit strategy and ensure you have a stop-loss set up to protect you from unplanned market movements. 

Strategy for Trading GBP/CHF

Breakout Trading

In most cases, those who use breakout trading are active traders and investors. They take a particular position within the earle stages of the trend. Breakout occurs when the price of an asset moves below the support point or above the resistance level. 

The first thing to do when using the breakout trading strategy to trade GBP/CHF is to locate the current patterns in price trends along the resistance and support levels. This will help you plan out your entry and exit strategy. 

After setting up a breakout strategy, decide when to cut your losses then reasses the patterns in price trends again. 

To plan out your exit when using the breakout strategy, you can establish a good exit price using the GBP/CHF’s recent performance. For instance, you can decide a target when you calculate the average price swings of the pair recently. This can be done with the use of chart patterns. 

Carry Trading 

In the carry trading strategy, traders are able to make profits even when there is a stable market. The carry trading does not rely on the movement of currency prices rather, it relies on the interest rate differential of a currency pair. 

This strategy entails borrowing a currency with low interest rate and buying a different currency with higher interest rate simultaneously. For each day a trader using the carry trading strategy, the broker pays an interest in line with the difference in the interest rate of the currencies. 

Using leverage, traders can make some profit from this trading when trading GBP/CHF. History has it that due to the stability of the Swiss Franc, traders have the opportunity to try out carry trading especially when there is a quick change in value of the pound. Also, the CHF is known to be a currency with low-interest compared to the pound, this makes it a great funding currency. 

In generally, any funding currency is typically characterized by low interest rate and it is used to fund the carry trading strategy. This implies that when trading GBP/CHF using carry trade, you are to short the CHF. 

Swing Trade

Typically, in swing trade, the trader holds on to a trading position for a good number of days or weeks as the case may be. Doing this help the trader to capture profit from those short-term patterns. Basically, what happens in swing trading is that the investor trades a range of price changes. 

Using the swing trade strategy, you are assuming that prices will keep moving along the range. This implies that once you have determined a range, it is possible that you go long support level of the range and sell the resistance level of the range. 

Factors that Influence the GBP/CHF Market

The Bank of England or the Swiss National Bank’s decision

The banking sector of Switzerland contributes a lot to its economy. It has brought development to even the smallest parts of Europe.

And this has made Europe one of the wealthiest countries globally. This also helps in maintaining the stability of the Swiss francs.

The banking sector of England has also contributed to its economic development. It has also contributed to the economic development of other countries, especially those adopting the British pound sterling as their currency.

These banks are responsible for the monetary policies of Switzerland and England. Thus the decision affects the forex trades of GBP/CHF.

Slight changes in the prices of major commodities

The slightest change in price can bring profits or a massive loss to a trader when trading GBP/CHF. Traders need to be watchful of every price change in the trade.

Traders should also know the essential strategies and pay attention to the fundamentals. Listening to or watching the Swiss UK financial news is one way to get updated on the financial markets.

This can help traders know when to buy or sell the GBP/CHF.

Economic events in Switzerland and the United Kingdom can affect the GBP/CHF market price. Some significant economic events can bring about inflation in the price of either GBP or CHF.

The significant economic development and events in the Eurozone can also affect the price value of the GBP/CHF.

The Trading Hours for GBP/CHF

It is necessary to know the best trading hour for any currency pair. The best time to be active and trade GBP/CHF is from 8:00 EST to 11:00 EST.

That is when the European and American sessions overlap. The average range of the GBP/CHF is 160 points daily.

This currency pair fluctuates around 100 days simple moving average. The use of the Fibonacci line and the slow Stochastic will help reveal reversal points.

Other factors determine the price changes of the GBP/CHF, especially in the medium and long-term trades. One of these factors is the statements by the representatives of the Bank of England.

Any change in the exchange rate and political policies of the economies can also affect the GBP/CHF.

The market closes on Friday and resumes on Monday. The forex market is not open on the weekends, and only special trading sessions get conducted during the weekend.

Traders can study the market during the weekend. This can help them come up with a new trading strategy that they can execute at the start of the week.

The Trading Session for GBP/CHF

The forest market trades 24/7. This does not mean all trades are active throughout the day. The forest market uses a 24-hour trading session to operate.

There are four sessions of the trade market: the Sydney session, the London Session, the New York Session, and the Tokyo Session.

The Sydney trading session starts at 7 a.m. and closes at 4 p.m. local time. Trade starts at 4 p.m. and closes at 1 a.m. for traders using the Eastern time zone.

The Tokyo trading session starts at 9 a.m. and closes at 6 p.m. local time. Trade starts at 7 p.m. and ends at 4 a.m. for traders using the Eastern time zone.

The London Trading session starts at 8 a.m. and closes at 5 p.m. local time. Trade starts at 2 a.m. and closes at 11 a.m. for traders using the Eastern time zone.

The New York Trading Session starts at 8 a.m. and closes at 5 p.m. local time. Trade starts at 8 a.m. and closes at 5 p.m. for traders using the Eastern time zone. The GBP/CHF trades under the European or London Trading Sessions.

The London Trading Sessions (European)

This is the second trading session to start the week after the Asian Trading Session. This zone makes sense and has a good number of financial markets.

The trading period gets stretched due to other major capital markets. Some countries are in this session. Examples are Switzerland, Germany, France, and Great Britain. Although the forex market only recognizes three of these sessions. They are the forex three-session system.

The three sessions are the Tokyo, London, and New York sessions. They are also called the Asian, European, and North American sessions. The trading sessions of the forex market also vary in the months of October and November.

They also vary in March and April. This is because of daylight savings time. Countries like the US, UK, and Australia shift to daylight savings during these months. There are two days the forest market does not operate apart from the weekend. These are Christmas day and New Year’s Day.

Choosing a Brokerage Platform for GBP/CHF

Choosing regulated brokers when trading on the forex market is very important. Choose a licensed broker, especially when trading a major currency pair like GBP/CHF.

Good brokers help traders make good traders. They do this by working hand with various resources and expert data.

Brokers offer traders direct access to the market to make trades anytime. A trusted broker should have a license from finance regulatory bodies, which guarantees an investor’s capital safety.

Many regulated brokers offer their platforms for trading currency pairs like GBP/CHF.

These platforms also offer investors to trade on cryptocurrencies, stocks, and indices.

Investors should make research brokerage platforms before investing with them. This is to avoid being victims of trade manipulations and illicit trading activities.

Some licensed and regulated forex brokers include:

Vantage Market

Vantage marketers, formerly known as Vantage FX, have been reliable, affordable trading for over 13+ years, with over 400,000 traders actively using this broker and 300+ CFD assets, including forex. In addition, traders have access to trading platforms such as MetaTrader 4, MetaTrader 5, Marker Trader, Web Trader, Mobile trading apps, Autotrader, Zulu Trading, MyFXBookand Trading view. 

They are regulated by the Australian Securities and Investments Commission (ASIC, Financial Conduct Authority in the United Kingdom, and Cayman Islands Monetary Authority in the Cayman Islands. 

Vantage Markets is one of the DMA forex brokers that focus on algorithmic and automated trades where trades are executed within predetermined parameters. They also have an active customer support team that can be accessed 24 hours a day. 

Traders also have access to a free demo account. This is an excellent opportunity for new traders to learn the ropes for the forex market before using their real accounts for trading activities. 

Deposit and withdrawal facilities include Bank transfer, Skrill, Swift, BPay, Neteller, Poli. Funds deposited via Bank transfer becomes visible in the account one day after the deposit is made, while funds deposited using credit or debit card shows up in the account after 60 seconds, 

Traders are permitted to withdraw manually or online. Most withdrawals are processed within a 12-24hours interval. After withdrawal is made, Australian traders can access funds the next day, while international traders have to wait several days for the money to reflect in their accounts.

Roboforex

RoboForex is a reputable online brokerage company founded in 2009, and its headquarters is located in Belize. It is regulated by the International Financial Service Commission (IFSC)

RoboForex provides traders with five different types of accounts, including the Standard Account, Micro Account, Islamic Account, VIP Account, as well as the ECN Account. Their customer service is available 24 hours a day. In addition, they provide email and phone support. Unfortunately, RoboForex doesn’t provide LiveChat Support. 

Besides PayPal and Skrill, traders can choose from four other funding and withdrawal facilities: Bank transfer, Credit Card, Neteller, and Payoneer. Traders are required to pay withdrawal fees but not deposit fees or inactivity fees. In addition, RoboForex offers 35 forex pairs, including major and minor forex pairs. 

RoboForex offers direct market access. This technology provides zero delays in order execution in STP mode, no-dealers, and no re-quotes. The RoboForex allows investors trade the GBP/CHF on their platform

Conclusion

One of the most influential currencies globally is The British Pound Sterling. Another influential currency is the Swiss Franc.

The British Pound Sterling is the primary currency of England, which is also used by other British countries as a legal tender. The Swiss Franc is the financial legal tender of Switzerland. The pairing of these currencies forms a major currency pair.

The GBP/CHF has a high demand and liquidity ratio. This is due to the similarities in the economy of the two countries.

Trading currency pairs on the forex market can be profit-oriented. That is when predictions go in favor of the investor. Huge losses can also get incurred when trades go contrary to the trader’s predictions.

The stop loss can get used to prevent or cut these losses. The stop-loss closes a trade when it reaches a specific limit. The GBP|CHF is best traded under the London Trading session at the start of the market. This is when the currency pair will be available. This is also when the liquidity of the currency pair will be high with low volatility.

Some factors affect the GBP|CHF trades, some of which include price fluctuations and economic developments of the two countries. Traders who wish to invest in the forex trading of currency pairs should engage in proper research. They can start by reading reviews on different brokerage platforms. They should also ensure they invest only with regulated platforms for the safety of their funds.

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