While the world is battling the pandemic, work from home jobs has become the new trend. Forex trading is one of the works that allows you to earn while you stay in the comfort of your home.
Forex trading is one of the most lucrative modern professions. It’s one of those works that never goes out of style.
Forex involves trading two currencies which are collectively called a currency pair. Traders profit either from buying or selling a currency.
While the concept can be very simple, the application can be complicated for newbies.
This guide outlines the basic information, tips, and strategies in trading successfully and, more specifically, in trading the USDSEK.
What does USD/SEK mean?
USD is United States Dollar and SEK is the Swedish Korona. The USDSEK or USD/SEK is a currency pair denoting the exchange rate between the two currencies.
The rate of trade will determine how much Swedish Korona it will take to buy one US Dollar. The US Dollar is the base currency while the Korona is the quote currency.
For instance, if the pair is trading at 9.0. That means that one US Dollar is worth 9 Swedish Koronas.
Background information
Before we discuss how to trade USD/SEK, let’s learn a little about their histories because these had an impact on building the economy of their countries.
United States Dollar
Currently, the US dollar is the strongest currency. Although, there are currently currencies that are better valued than USD like Kuwaiti Dinar.
We say that the USD is the strongest because it is the world’s reserve currency. This means that it is used by central banks around the world to hold US Dollars and use it for international transactions.
The history of the US dollar is pretty long. But here are the snippets.
The first USD bill was printed in the 18th century due to popular demand during the American Civil War.
The first bills were printed green so there were called the greenbacks. This name is still used today by other people although it is not that popular.
After the civil turmoil and the US government was reformed, the USD rose in value.
Since then, it has consistently progressed. In the 90s, it was made the world’s first reserve currency under the Bretton Wood Agreement.
The agreement was signed by all Allied countries. It can be argued that it was a result of the US’s role in ending WWII.
As a reserve currency USD is used:
- in place of gold as a national reserve
- in setting prices of goods and gold
- in oil transactions for countries under OPEC
- in settling global financial transactions
Aside from the United States, other countries have adopted the USD as their official currency. These includes:
- Guam
- Somalia
- Panama
- Ecuador
- Puerto Rico
Swedish Korona or Swedish Crown
Korona means crown in Swedish.
It is the official currency of Sweden and is regulated by the Swedish Central Bank or Sveriges Riksbank.
Before the first world war, the Scandinavian Union was founded. The union adopted the korona as the official currencies of their member countries.
Sweden used the tern Korona, while Denmark and Norway called it Krone.
When the union was dissolved, the countries’ currencies separated but they kept the name.
The Swedish coins and bills have undergone many changes in design and materials over the years.
One notable change was the moving picture in the striped band of the 1000 Korona bill that was introduced. The Swedish Central Banks was the first to incorporate this security feature in a monetary bill.
Over the next few years, other countries followed suit, incorporating this sophisticated feature in their paper bills.
The Swedish economy is highly reliant on its export trade. It mainly exports minerals, chemicals including pharmaceuticals, appliances, and vehicles among others.
The country has a stable political and local economic environment, an excellent and well-educated labor force, and impeccable infrastructures. All these make it attractive to foreign investors.
Sweden has established good diplomatic relationships with the United States and other European countries, making its export business flourish over the years.
It is very vocal and active in humanitarian efforts and issues. This made it one of the leading countries in global peacemaking bodies.
All these efforts contribute to the growth of its economy and the strength of its global relations.
When is The Best Time to Forex Trade USD SEK Currency?
Various factors affect the ideal trading time. But the most important factor is the location of both currencies.
The location determines the opening time of the market.
The USD is more liquid when the New York market is open. And the SEK is more liquid when the London market is open.
The best trading time for USDSEK is from 1300 to 1700 GMT. This timeframe is when both markets overlap. Meaning they are open at the same time.
The trading transactions happening in and between both markets makes the spread tighter and the volume of liquidity higher.
It is also important to note that this period is not only good for trading USD SEK, but also most currency pairs.
This is a golden time because of the overlapping sessions of the United States and Europe.
Trading USD SEK through Forex brokers
Here are some globally recognized forex brokers that you can use when trading USDSEK.
Vantage FX
When entering the forex industry, one of the most important decisions you make is choosing the right broker.
Vantage FX is a great forex broker. It was founded in Australia. Over the past few years, it has grown and is now internationally recognized.
Is Vantage FX reliable?
A reliable broker is licensed and regulated by at least one financial authority. The regulation is a mandate for the security of the clients.
Vantage FX has oversight by various banks and entities around the globe, including:
- Australian Securities and Investments Commission
- Cayman Islands Monetary Authority
- Vanuatu Financial Services Commission
For security purposes, Vantage FX keeps the fund of the clients in a separate account from that of the company.
All funds are held by the National Australia Bank, which is a highly regarded financial institution.
Also, Vantage FX is being audited periodically by KGMP. This auditing firm reviews how client funds are managed and secured. The firm then issues a financial report detailing its findings.
And if you still do not feel secure, you need to know that client funds have liability insurance of more than 20 million USD.
What are the platforms offered by Vantage FX?
- MetaTrader4
- MetaTrader5
- ProTrader
- Vantage mobile app
What are the advantages of trading through Vantage FX?
Vantage FX provides an excellent trading experience to the client for these reasons:
- Fast account opening
- No commission fee for the standard account
- Low spreads
- Offers 24/7 trading with no overnight fee
- Provides demo and Islamic account
- No withdrawal and deposit fee
- 24/7 customer support through phone call and live chat
- Low minimum deposit (only $200) for the standard account
- No inactivity and other hidden fees
- Has established offices in over 30 countries
- Uses 3rd part social trading services
- Uses a notable financial institution for client funds
- Licensed and regulated by several financial authorities
- Various choices of upgraded trading platforms
- Offers as high as 1:500 leverage multiplying your potential profit
- Trading is made easier for all kinds of traders (like algorithmic, high-volume, high-frequency, scalpers, and day traders)
Roboforex
Roboforex is based in Belize City, Belize. A decade in the business allowed it to grow and establish other offices around the world.
Is Roboforex reliable?
Roboforex is regulated by two major financial institutions.
- International Financial Services Commission in Belize
- Cyprus Securities and Exchange Commission in
In addition, it has won many awards, like Best Investment Platform and Best Mobile Trading App.
What are the platforms offered by Roboforex?
Robo FX allows clients to use:
- CopyFX
- cTrader
- MetaTrader5
- MetaTrader4
- Mobile trading app
What are the advantages of trading through Roboforex?
- Transparent
- High client volume
- Quick execution of orders
- $30-doller bonus deposit for new accounts
- Offers demo account for practice trading
- Has extensive learning resources available for clients
- $10 minimum deposit
- Accepts different payment methods
- Has Islamic accounts
- More than 40 forex assets
- Offers special accounts
Capital.com
Capital.com operates globally and offers a one-click trading experience to users.
Is Capital.com reliable?
Capital.com is regulated by:
- Cyprus Securities and Exchange Commission
- Australian Securities and Investments Commission
- Financial Conduct Authority
- Belarus National Bank
Also, Capital.com maintains the confidentiality of client information. It uses encryption systems and follows the standards of PCI Data Security Standards.
What are the platforms offered by Capital?
- MetaTrader4
- Web-based platform
- Mobile trading app
What are the advantages of trading through Capital.com?
- Offers tight spreads
- Updates on the market and economic news
- Offers trading courses and guides for all clients
- Easy to use platform operated by AI
- Regular price alerts
- Withdrawals are processed within 24 hours
Things to consider when trading USDSEK
US and Sweden trade relations
There is a strong bilateral relationship between the United States and Sweden. When the United States gained independence, Sweden was one of the first countries to recognize its independence.
Today, Sweden and the US strive to create and maintain opportunities for transatlantic commerce.
Sweden is one of the largest investors in the US. Reports show that both countries invest over 94 billion dollars in each other’s economies in terms of goods and services.
They belong to the same global entities and groups. It further strengthens their bond.
Additionally, Sweden acts as the United States protecting power in North Korea.
If the economic and political relations between the two countries are maintained, the exchange will retain or increase.
But if the relationship becomes strained, chances are the rate of exchange will drop.
Identify the market trend
Before opening a position, you should know where the price is moving. Also, you should evaluate the volatility of the market.
If you see signals that the trend will have a fall, you should close your position as soon as possible to avoid losses.
If the trend is moving up and, based on your analysis, it will continue to go up, enter a position and hold it. But you have to be alert for any signal of a downtrend, so you will know when to close.
Plan your trading style
Trading involves precision and accuracy. These are achievable with careful planning.
Your plan should depend on various factors, including:
- Your chosen currency
- The current trend of the market
- Your chosen strategy
- Market sentiment
The plan should outline where and when you should enter and exit the market. These points are crucial in determining your profit or your loss.
Another vital part of the plan is how you manage risks. Risk management is your backup in case things go south.
When trading, you always start with an assumption. This assumption can either be that the market price will go up or go down.
Your assumption will not always be right. You should know what actions to take if your initial hypothesis is wrong.
Decide your timeframe
The time frame determines the number of times traders hold on to a position. It also distinguishes the different types of traders.
Scalpers trade in the shortest timeframe. They take advantage of small fluctuations in the market price. They open and close their trades in a few seconds or a few minutes. They earn only a tiny amount in one trade.
Day traders are just that. They trade within the day. They close their trades before the market closes for the day. They do this to eliminate overnight risks.
Swing traders open and hold their positions for several days, but they usually close trades before the weekend. Like day traders, they want to eliminate the risks when the market closes on the weekend.
Position traders trade the longest. This type of trading does not require a lot of time commitment. Position traders can hold their position for several weeks to several months.
Prices of goods
Since the Swedish economy mainly relies on export, its currency value is highly dependent on price.
If the global market price of its products rises, the value of its currency will also increase.
The prices of exported goods are reliant on the demand.
Swedish export trades have high elasticity. It means that when the demand is low, the price will also plummet. And when there is high demand, the price will rise.
Trade during the golden hour
Timing is vital in trading. Timing entails the right currency at the right time and in the right position.
The best trading hours for USDSEK are between 1300 to 1700 GMT.
This timeframe has the highest liquidity for USD and SEK. The reason is that this period is an overlap between New York and London markets.
Higher liquidity means more volume of trades. The more active a market is, the easier it is to open and close trades.
Correlation of currencies
In Forex, correlation refers to the link between currencies and currency pairs. It can come in the form of positive and negative correlations.
A positive correlation means that two currency pairs move together upward or downward.
A negative correlation is an opposite. It means that two currency pairs move in opposite directions.
If one currency pair moves up, the correlated currency pair moves down.
This relationship is a result of the same factors that affect the rise and fall of individual currencies.
The USDSEK has positive correlations with:
- USD SDG (United States Dollar and Singapore Dollar)
- USD NOK (United States Dollar and Norwegian Krone)
- EUR SEK (Euro and Swedish Korona)
- USD CAD (United States Dollar and Canadian Dollar)
- GBP NOK (Great Britain Pound and Norwegian Krone)
The USDSEK has positive correlations with:
- SEK JPY (Swedish Korona vs. Japanese Yen)
- AUD USD (Australian Dollar vs. United States Dollar)
- EUR USD (Euro vs. United States Dollar)
- NZD USD (New Zealand Dollar vs. United States Dollar)
- EUR JPY (Euro vs. Japanese Yen)
Keep track of commodities
The Swedish Korona is an export-reliant currency. Its value correlates with the price of iron ore, timber, and hydropower.
Other trades that support the Swedish economy and drive the value of Swedish Korona are:
- Telecommunications
- Pharmaceuticals
- motor vehicles
- industrial machinery
- chemical goods
- appliances
- steel
- iron
- forestry
- precision equipment
Export trade is the main driving force behind the Swedish economy. It’s the main reason why the rise and fall in prices of the goods and services above highly affect its currency rate.
Prices of goods are frequently moving up and down. It depends on the current rate of supply and demand.
Swedish trade flow happens mostly with:
- United States
- Germany
- United Kingdom
- Norway
- Finland
- Denmark
Recently, there has been an increased demand for Swedish goods and services.
It is not just in the countries mentioned above, but also in other countries, even in Asia.
Also, the oil price correlates with the value of the Swedish Korona. An increase in oil price will pull the price of Swedish Korona because it is a risk-on currency.
Strategies applicable to USDSEK
Trend trading strategy
Trend trading involves taking advantage of foreseen major trends.
It is a basic technique that applies to both new and experienced traders.
When applying it to USDSEK, you should use oscillators in determining entry points. For your exit strategy, you should calculate based on the risk-reward ratio.
Set your set profit 50 pips or more away from the entry point if the stop level is at 50 pips away.
Scalping trading technique
Scalpers are traders that profit from small trades.
If you want to try scalping when trading the USDSEK, you have to open and close several positions in a day. Scalping advantage of small changes in market price to earn small profits.
Scalpers look not at the profit of individual trade but the accumulated profits. Even so, there is a profit potential when using this technique.
This technique requires time. You have to monitor the price because a slight rise and fall open up profit opportunities.
Scalp traders can hold the position for as short as five minutes.
Position trading
Position trading requires lesser trading time. It involves holding your position for long periods.
For example, traders will buy USDSEK. They will hold it for months and even years, waiting for a significant uptrend before closing their position.
For position traders, minor daily and weekly fluctuations in the prices are unimportant. What they look at is the broader market picture. They predict the long-term trends in the market.
Range trading strategy
Range trading is perfect for low volatility markets like USDSEK. Since the economies and trading relationships of the US and Sweden are stable, there are fewer significant fluctuations in their prices.
Range traders buy the USDSEK during periods when there is overselling and sell when there is overbuying.
This strategy is useful for any time frame and at any time. But it is more effective when there is no discernible long-term trend shortly.
Carry trade strategy
Carry trade is a strategy that is best suited for experienced traders.
Carry trade is borrowing a currency with a low-interest rate and investing it in another currency with a higher rate of return.
The Japanese Yen is great for carry-trading because it has zero interest rates.
Price action trading strategy
Price action trading is a stand-alone technique or combined with other trading techniques.
It involves making a prediction on the direction of the market based on historical data.
If you trade USDSEK, there are technical tools you can use. These tools determine the support and resistance levels.
These include oscillators, indicators, trend identification tools, candle wicks, and the Fibonacci retracement method.
The support and retracement levels will show you the ideal entry and exit points.
Swing trading strategy
Swing trading is a medium-term trading strategy. It involves holding your position for a few hours or several days.
When using swing trading for USDSEK, it is vital to note that you have to close your position before the weekend.
It will eliminate additional risks of sudden changes when the market reopens on Monday.
For exit and entry points, used indicators (an example is stochastic) and average true range oscillators to see the ideal time and place.
Parting words
Sweden and the United States are both politically and economically stable. Hence, they are safer for new traders.
But trading always has its risks. And the USDSEK pair is no different from other pairs.
It is affected by market sentiment, environmental and social factors, economic indicators, and others. Traders can assume the direction of a trend, but there is always a possibility that they can be wrong.
Having said so, a trader should always prepare for the unexpected. They should have a solid plan that outlines their actions for every possible scenario. Contingencies and risk management are vital.
That is the secret to a successful trading career. The best trading tools are knowledge and technical analysis combined with common sense and discipline.
English