PLN/USD Trading Tutorial

The foreign exchange industry is a trading platform for various currencies. There are as many currencies as there are countries, but only a few get traded in forex.

The US dollar (USD) is a major currency used in forex trading. The size of the GDP makes it the most used currency in the market. Because the United States has the greatest GDP in the world, the USD is the most partnered currency in currency trading.

The Polish zloty, also known as the PLN in forex, is not as well-known as its USD equal. They do, yet, pair them so that traders can buy and sell them in the forex market. The USD/Zloty currency pair is also known as the PLN/USD.

The Polish zloty is divided into 100 bits called the Grosz. The Narowdy Bank Polsky regulates Grosz (NBP). To control inflation in Poland, the NBP manages financial prices and regulates the Zloty.

The Polish zloty has long been a subject of contention in discussions. Whether Poland will join the Euro Zone. If this occurs, it will convert its currency from Zloty to Euros. It has not changed as of 2021.

The history of the zloty to dollar exchange rate

The PLN/USD pair is a minor currency pair with all features of an exotic currency pair. It has high volatility, low predictability, low liquidity, and wide spreads.

Because they are exotic currencies, the zloty to dollar gets compared to the rand and the ruble. They have similar characteristics.

The US dollar was established in 1792 with coins like those used by the Spanish and Mexican governments at the time. The Spanish and Mexican dollars were taken out of circulation in 1857.

The PLN/USD is a distinct currency pair. Trading an exotic pair is not recommended for beginner traders. Exotic pairs demand a trader’s expertise before making any investment decision.

The green bucks/dollar notes got printed in 1861 to finance the civil war. The Bretton Woods agreement signed in 1944 initiated the USD into the world. It is still in use today.

The phrase zloty arises from the Polish term zlogo, which signifies “golden.” The zloty was launched in 1924 to replace the Polish mark that was in use from 1917 to 1924. Hyperinflation saw the introduction of a new zloty in 1950 and again in 1995.

Each new zloty outperformed its predecessor one by a factor of 100. Implying that the new zloty was 10,000 times stronger. This equates to one new zloty to 10,000 old zlotys.

In the 1950s, the zloty-to-dollar exchange took place but in small quantities. It increased in 1990 as a result of the stabilization program implemented in 1990 and 1991. They had to resolve an exchange rate between the zloty and the dollars to reduce the high rate of inflation.

Poland struggled to stabilize high inflation from 1991 to 1998. The zloty got stabilized by devaluing it. It got devalued against a few other currencies, the most notable of which was the US dollar.

On October 21, 2000, the USD was trading at its highest rate against the zloty, around 4.71. When Poland became a member of the European Union in 2003, the zloty appreciated. Poland began doing business with European Union members, boosting its exports by 49 percent.

From 2004 to 2008, exports and imports expanded in Poland, the zloty strengthened against the USD. Make no mistake, the USD remained superior, but the zloty was gaining traction.

With its fast-growing economy, many investors saw Poland as an opportunity to invest. This investment benefited Poland so it remained steady from the global financial crisis.

From August 2008 to March 2009, the zloty lost 40% of its value against the USD. It fell because investors stopped investment in new emerging economies. Investors assumed Poland had grown capable of supporting itself.

Although the zloty experienced lagging due to reduced investment, the zloty recovered, albeit not fast as before.

Since 2010, the zloty has been varying as it attempts to recoup its losses. Its value relative to the US dollar increased in 2013 and decreased in December 2016. It rose again in 2017 when Poland’s rate of unemployment was at its lowest.

In January 2018, it continued to rise. It fell in February 2020 as a result of the Coronavirus pandemic, which was particularly severe in the United States. The PLN/USD fell to its lowest level since 2009 in 2021 as a result of the coronavirus pandemic.

What is the best way to trade the PLN/USD?

Step 1: Sign up for a trading account with a broker

A wide variety of forex brokers have popped up. Every broker provides a unique range of services. Compare different services and fees that brokers charge before settling on one. Don’t ignore the incentives that some brokers provide; it’s an extra benefit to choosing a decent broker.

Check the prices of all assets you might consider trading in the future, such as Exchange-traded funds and bonds. Your forex broker should provide you with access to a research pool, comprised of various trading firms.

To trade the PLN/USD, you should be able to convert your country’s currency to zloty or dollars through your broker. Decide what sort of account you wish.

If you have agreed with a broker, open a forex account by filling out your data. Verify your information with copies of your identification cards.

Some brokerage firms may inquire about your financial situation and financial history. They need this data to determine whether you can handle financial risk.

Step 2: Get a forex trading platform

After you’ve opened a brokerage account with your broker, install a trading platform. There are several of them. MT4, MT5, Etoro, Avatrade, and other platforms.

Some brokers prefer certain trading platforms and will need you to install them. You will be able to access the market, open, close, and manage trades using the trading platform.

After downloading, familiarize yourself with the platform by using the trading tools available. On the market window, there are various types of currencies. You can look at the charts for the PLN/USD because we are trading it.

To gain experience, create a demo account. Switch to a live trading account once you’ve gained enough confidence.

Step 3: Conduct a market analysis

The most essential step is market research. Fundamental analysis and technical analysis.

You need to look at the history of zloty’s price variation to perform a technical analysis. Examine all the timeframes you’ll need four hours, a day, a week, a month, a year, five years, and ten years.

Different timeframes enable you to see the trend of the cost. Which is the best way to conduct technical analysis. This article will outline some fundamental analysis spots to look into. 

The term “fundamental analysis” refers to the study of the effects of the market movement.

Step 4: Add money to your account

A forex broker will provide you with several alternatives for funding your account. You can enter the credit card, wire transfer information, EFT information, and a check.

Keep the required account balance of the forex broker in mind as you prepare to fund your account. Before you trade on margin, make sure you have the least account balance necessary.

Step 5: Begin trading

Understand the PLN/NZD quotes before you begin trading. The base currency is the first currency. The base currency is the Polish zloty. The USD is the quote currency. 

The zloty to the dollar exchange rate is 0.25372, which means that 1 zloty equals 0.25372 US dollars.

• Go to your trading platform and open the chart for the PLN/USD currency pair.

• Set a time frame you want to use.

• Check the divergence and trend of the price using indicators. They include Fibonacci ratios, moving averages, and MACD.

• Based on your analysis, decide on an opening and closing position. Choose a profit target and a stop loss level. The stop loss is required to limit your losses if the market does not favor your options.

• Either a buy position or a sell position will help to enter the price market. If you have a buy position, you are confident that the zloty will appreciate against the dollar. The zloty will depreciate against the dollar if you take a sell position. Concentrate on a position and enter the market.

• Wait for the market to approach your profit target. Then exit the position by buying or selling.

Factors that influence the PLN/USD exchange rate

The movement of the zloty against the dollar is influenced by some factors. Factors such as bilateral trade agreements, monetary policies, interest rates, and others.

When trading the zloty to dollar pair, there are factors that a trader must consider. They control the forex market’s price movement. This article will highlight the key areas to focus on if you want to trade the PLN/USD for the long term.

Let’s take a look at what influences the zloty’s exchange rate with the dollar.

Rates of interest in zlotys to dollars

Interest rates in both countries can cause the zloty or the dollar to appreciate. The zloty’s price movement to the dollar would be affected by the appreciation of these currencies.

The Federal Reserve governs all financial resources in the United States. It keeps an eye on the dollar by implementing measures that control short-term interest rates.

If the Federal Reserve makes any changes, it will have an impact on the PLN/USD exchange rate. When conducting research, it is critical to pay close attention to the news released by the Federal Reserve.

In Poland, the zloty interest rate is controlled by the National Bank of Poland (NBP). The rate of inflation is governed by interest rate policies. as Poland’s inflation rate has reduced and is below 2.5 percent.

There could be an appreciation or devaluation of the zloty. This is if the NBP changes its policy on the reference rate. The effects will be reflected in the PLN/USD exchange rate.

The stocks that investors buy in Poland in the United States are affected by interest changes.

In conclusion, the National Bank of the United States and the Federal Reserve System are crucial assets. They are instrumental in fundamental analysis and price regulation.

Changes in the prices of exported goods

Poland trades coal and iron with EU countries. Among European countries, Poland has the largest mining industry. The zloty will be affected if market prices for these commodities change.

Poland’s economy is free-market. Its economy relies heavily on export and import trade with its trading partners. It has built and stabilized its economy by establishing a consistent and reliable supply of exports.

The state of the economies of countries that trade with Poland and the United States

Poland’s rapid economic growth was aided by imports and export. Automobiles, crude petroleum, and machinery are among Poland’s exports.

Poland exported $73.51 billion in goods to Germany in 2020, and $15.03 billion to the Czech Republic. Besides, the United Kingdom imported products valued at $14.57 billion.

These countries contribute to Poland’s financial security in part. Any financial or political changes in Germany will have repercussions on Poland.

When it comes to trading goods and services, European Union members have no trade barriers. They make a significant contribution to Poland’s import and export industries. If you plan to trade the zloty for a long time, you should be aware of any reforms.

The dollar value is affected by countries exporting and importing goods to the United States. China exports $381.1 billion in goods, while Mexico imports $ 300.3 billion from the United States. Canada imports $ 261billion from the United States.

These nations contribute to the USD’s value. The price of zloty to dollars will fall if the value of the US dollar falls. On the contrary, as the value of the dollar rises, so will the price of zloty to dollars.

An increase in Poland’s or the United States GDP

Poland’s economy is rapidly expanding as a result of ongoing industrialization. Poland’s GDP lists at 23rd in the world. Poland’s GDP has increased over the last two decades. It indicates that the value of the zloty has soared.

Poland’s economy is diverse, and all sectors have contributed to its sustained growth. They have the hospitality industry, the industrial and agricultural sectors leading the way.

In 2017, Poland’s economy was classified as a developed economy. It is the only country in Europe to avoid the 2007 global recession.

Poland’s economy is strong but not as powerful as that of the United States. The United States has the world’s highest GDP, valued at 20.94 trillion dollars. It is the world’s leading trade country, and trade has propelled its economy forward.

When the US or Poland experiences robust growth, the zloty to dollar pair experiences price fluctuations. While Poland’s GDP rises, the value of the zloty falls concerning the dollar.

The price of the zloty to the dollar rises in parallel with the United States’ GDP.

The EU’s economic well-being

The EU is one factor to consider when examining the factors that influence the zloty to the dollar. There are 27 members of the European Union. The economies of these countries are influenced due to several factors.

In each of these countries, 63 percent of the products they import and export come from European Union members. The EU is one of the three leading international trade participants.

Remember to look at the EU’s employment and unemployment rates. They are important economic growth indicators. E-commerce is another area where Eu countries are rapidly gaining popularity.

The transportation sector contributes to the smooth functioning of trade between member states. The EU’s growing economy relies heavily on sea, water, and land transportation.

The European Union has more than doubled its renewable energy consumption. As a result, there is less reliance on fossil fuels. It has broadened the range of energy sources. The number of harmful gases emitted by greenhouses has decreased as a result.

These factors affect the European Union’s economic growth. They are price action indicators for the zloty to dollar pair. Poland anticipates abandoning the zloty to transition to the Euro. Like the majority of European Union members. 

This shift should occur in early 2022. A positive price movement expects a price consequence.

If this happens, the value of the zloty or the Euro against the dollar will fall. The value of the zloty will rise to match that of the US dollar.

The benefits and drawbacks of trading the PLN/USD pair

The zloty to dollar exchange rate has both benefits and drawbacks.

Trading the PLN/USD has many advantages

Market forces do not affect them

The zloty to the dollar exchange rate is a unique one. This pair is traded by a small number of traders, the majority of whom are Polish. Market forces such as an increase in the number of traders do not affect the zloty to the dollar.

The demand and supply of a currency are influenced by the number of people who trade it. The zloty to the dollar exchange rate is unaffected through market demand and supply.

Drawbacks of the PLN/USD

Liquidity shortages

The PLN/USD is a currency pair that incorporates an exotic currency with a major currency. As a result, it’s quite volatile and liquid.

It is prone to change

Because few people trade this pair, the zloty to the USD has low liquidity. There are lesser buying and selling orders in the market when liquidity is low. Trading opportunities are hampered by a lack of liquidity. You must wait for breaking news before trading short-term when the market is more liquid.

Spreads that are too wide

Because the zloty to the dollar has less liquidity, the spreads are expensive. It’s a unique currency, which could explain its scarcity.

Trading strategies for the PLN/USD

The zloty has a high level of volatility when compared to the dollar. Some may view this as a disadvantage, but short-term trading can be profitable. By exchanging the zloty for the dollar, day traders can make a lot of money.

strategies to use are;

• Scalping the PLN/USD 

• Utilising Swing trading

• Trading daily (Day Trading)

Trading on a smaller scale, also known as scalping

Scalping is the use of small price spikes in the market. Scalp trading involves making small trades that can last minutes, hours, or days.

The benefits of scalping the PLN/USD

Several trades in a single day

One of the benefits of scalp trading is the ability to open multiple positions in a single day. The price of the zloty to the dollar fluctuates a great deal. When the market is liquid, you can profit numerous times in one day.

Other strategies will require you to hold off on closing a position for a while. Scalp trading can provide a trader with a steady stream of income. This is the method used by the majority of traders who rely on forex trading as their primary source of income.

Less risk of losing capital

You open small positions to trade when scalping the PLN/USD. Scalp trading, in comparison to other strategies, requires less capital to open a small position. The level of risk that you may face is marginal.

It takes less time

Scalp trading is when you trade the PLN/USD’s small price movements. Small price actions are common in the market, especially in more volatile pairs like the PLN/USD.

A narrow price increase can be detected in a short amount of time. Scalp trading takes less time to buy stocks than other strategies that rely on a trend.

Scalping the PLN/USD currency pair has some drawbacks

To make a profit, you must be consistent

You need a succession of profits to make a decent living. If you are making minor trades, more shortfalls than profits will lose more money.

When entering and exiting a position, you must be precise.

Problems with the technology

Because scalp trading involves trading tiny price movements, use efficient trading equipment. To lockstep with the price movement, I prefer a fast execution rate. Any delays could result in a loss of investment.

The price movement can take minutes at times, which is why you need dependable facilities.

How to trade the PLN/USD using scalping

When news about the EU breaks, scalping the zloty to the dollar is a good option. Scalp trading needs a technical examination of the zloty to the dollar exchange rate.

Scalp trading takes advantage of price pulses that last only a few seconds. To predict market surges, look at the daily one-minute and tick charts of the zloty against the dollar.

When there is big news, it is a good time to scalp the zloty to USD pair. The price movement is driven by economic reports from the United States or Poland.

To begin, make sure your broker offers a reasonable spread for these two sets. You’ll be opening and closing a lot of positions so currency spreads must be reasonable. This is so that you don’t lose a lot of money on spreads.

To forecast the trend, use indicators. To scalp trade the PLN/USD, you can use a variety of indicators. One useful tool is the Bollinger band chart. It aids in the prediction of the zloty to the dollar pair’s volatility.

Another tool for predicting the trend of the zloty to dollar mobility is the moving average. It is helpful because it foretells the currency’s next move more than other indicators.

Short the zloty by opening a short position when you believe the zloty will fall in value. If the zloty strengthens against the dollar in the reverse direction, go long on the zloty.

When scalping the zloty to the dollar, keep in mind to trade when the market is liquid. Liquidity allows you to open and close positions fast. Trade with only one active trading position at a time. Dealing with price deviations while holding many positions will make you nervous.

When scalp trading, leverage can be very profitable. However, exercise extreme caution.

Swing trading 

Swing trading the PLN/USD has many advantages

It is financially rewarding

With the right strategy and loss management tools, you can make a lot of money. Creating and sticking to a good swing trading plan, can make you a good profit when swing trading.

It requires less time

Since your analysis consists of daily technical chart analysis, you spend less time. Set your target profit and stop-loss levels.

Swing trading is a strategy used by both students and employees.

Swing trading the PLN/USD has some downsides

It’s a gamble

It is bound to throw you off, no matter how much analysis you have done on the PLN/USD price market. The US dollar gets traded widely, and market movement in this pair is difficult to predict.

To avoid losing money when swing trading, you should use a strategic plan. Swing trading training is beneficial for gaining more knowledge you’ll need.

Price discrepancies overnight

You can open a position, and when the market closes for the night, the market will change direction. It has the potential to send you in the wrong way, resulting in massive losses.

How to trade the PLN/NZD using swing trading

Swing trading is another viable option for the zloty to dollar pair. Short trades are possible with swing trading. Profits from all these positions add up to a decently monthly or annual income.

When using fundamental and technical analysis to trade, it can take 5 to 10 days to make a move. Swing trading entails taking smaller stop losses than when day trading.

Because of the volatile market, swing trading is a good strategy for zloty to dollar trading. This strategy is appropriate for this pair. It allows small losses while also enabling greater wins.

Using the indicators, find a trend. To get a clear picture, change the EMAs (moving averages) to a line graph. Examine the trend using various timeframes.

Buy at the swing lows/go long and sell at the swing highs/go shot once you’ve identified a price trend.

To minimize losses and maximize profits, place stop losses where possible. Depending on market forecast, swing trading can also take an extended time frame. They are not limited to small gains and have the potential to yield vast profits.

Swing trading the zloty to the dollar is better with profit target. As a result, it is the most effective method of trading this pair. The accumulative profit will be minimally affected by the high spreads.

Trading the zloty for dollars has more difficulty than it appears, given market volatility. The zloty to dollar market is lucrative, and if you put in the hard work, you can earn. It’s a green market where few have dared to go.

When you want to trade the PLN/NZD, make sure you have a good broker. Arm yourself with the knowledge you can get your hands on. A well-thought-out strategy will be helpful.

Day trading 

Day trading is a trading strategy in which you open and closes a position that same day. Day trading gets characterized by leverage to increase profits in a short time, usually within one day.

The benefits of day trading the PLN/USD 

You hold your position for only a day

The risk of gaps in the market in the morning when holding positions overnight is real. Day traders, on the other hand, are not exposed to the risk because they trade daytime.

Liberty of time

Traders can complete their day’s trading as early as noon and still meet their profit targets. The rest of the day is theirs to do whatever they want. To make money with other trading strategies, you have to check for days.

A decent wage

You could reap good profits if you combine a good strategy with quality research and leverage power. If you are disciplined enough, day trading can make you a good profit.

Furthermore, if you make a profit one day, you can use that profit. It can be investment the next day to make much more profit.

Day trading the PLN/USD has shortcomings

It needs practice

A day trader may experience consecutive losses at some point during the day. Leading them to contemplate trading beyond business hours. A day trader must have the discipline to refrain from making emotional decisions.

Self-control extends to the trades they perform during the day. They must stick to the approaches developed, and avoid chasing after other tides.

Possibility of loss

The majority of day traders use margin to increase their profits. Although leverage can increase profits, it can also increase losses. As a day trader, you must employ all methodologies available.

The market liquidity of the PLN/USD fluctuates a lot 

Because of its volatile liquidity, the PLN/USD is a slightly difficult market to trade. As a day trader, you must be glued to your desktop computer at all times, analyzing the volatile market.

How to trade the PLN/USD using the day trading method

The USD is a major currency with a large forex market, the PLN/USD has some liquidity. As a result, you’ll need a fast broker or one with direct market access.

Make sure you’ve done a thorough technical analysis. That is before trading the zloty against the dollar. Indicating that you have examined the 15-minute chart, 1-day chart, weekly chart, and monthly chart.

The reason for this is such that you can see the price’s overall trend. Before you place any orders in day trading, you must conduct sufficient technical analysis.

Some day traders copy the strategies of more experienced traders. Others create a trading strategy to follow.

After you have created a winning strategy that you can use every day, make a habit of going over it every morning. It will serve as a guide to profiting from trading. Choose between the 4-minute and 15-minute price charts to use.

Use stock screeners, moving averages. Others are like Bollinger bands, the relative strength index RSI, and other indicators. Keep an eye out for a breakout in the zloty’s price movement against the dollar.

Open a position based on the analysis you performed that day. You place a buy order to buy the Polish zloty if you believe the zloty will strengthen against the dollar.

In the same way, if the dollar value rises, you place a sell order to buy the dollar. You can trade with a margin if you have done your research and are confident in your predictions.

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