Singapore, one of the four Asian tigers, has continued to experience economic growth since its independence in the 1960s.
The country operates a capitalist economy in a transparent environment and is considered one of the least corrupt nations in the world.
Its location at the intersection of a few major international shipping routes makes it one of the big players in international trades.
Singapore’s national currency, the Singapore dollar, is backed by its foreign reserves, though this was not always the case.
Background of USDSGD exchange rate
In 1963, after Singapore’s independence, its national currency was pegged to the British pounds until the 70s.
In 1973, it was taken off the British pounds and pegged to the US dollar until the mid-80s.
In 1985, the country removed its legal tender from the dollar. It then pegged it against a group of unrevealed trade-weighted currencies.
Since then, the Singapore dollar has floated with these unrevealed currencies. It remains closely guarded by the country’s monetary authority to prevent inflation and maintain its export competitiveness.
Its economy has continued to expand since the 1960s.
Though the country’s population is relatively small, as of Dec. 2020, its GDP has exceeded $320billion.
As one of Asia’s industrial giants, the country relies on exports of electronic products, shipbuilding components, and financial services. These exports influence its exchange rate.
Meanwhile, the US dollar, the most traded currency in the forex market, is influenced by several factors such as:
- Announcements from the federal reserve
- Economic and political news release
- Global prices of commodities such as agricultural products, oil, etc.
What is USDSGD?
The UsdSgd represents the US dollar and the Singapore dollar pair. The quote tells you how much of Singapore’s dollar equals 1 US dollar.
USDSGD 1.36 would mean 1 US dollar is equivalent to S$1.36.
Though considered a minor pair, it is the 10th most traded in the forex market. As a major economic nation in Asia, forex traders see an excellent opportunity to invest in the continent through trading this pair.
Paired with the US dollar, it holds a great appeal to investors.
As we’ve explained, its thriving economy influences the exchange rate. And in the last 5-years, the Singapore dollar has strengthened continuously. Except in 2020, when world economies ground to a halt due to covid.
The pair have held forex traders’ interests, as they continue to profit from speculating on it.
When’s the best time to trade USDSGD?
Timing has a huge impact on the profitability of your trade regardless of the pair. And the USDSGD also have their most profitable times.
An active market means higher volatility, resulting in greater liquidity for the pairs.
For the USDSGD, the market sees the most activity during the 2-hours Tokyo-Sydney overlap. That’s between 5-PM to 7-PM GMT (2-AM to 4-AM EST).
The pair also enjoys high liquidity when the Asian market is open, 7-pm to 4-am EST.
How to trade USDSGD?
You will need a reputable broker to enjoy trading this forex pair. One who qualifies for this description is a recognized broker with proper licenses and readily available customer service.
Many reputable brokers are offering excellent forex trading services. Markets.com, Vantagefx, and Roboforex are an example of these. We’ll explain their basic offerings below this tutorial.
Once you choose your broker, simply head to their website and register with them.
After you’ve done this, it is time to trade the USDSGD pair:
Fund your trading account
Funding your account is the first step to trading this pair. There will be several easy options to do this if you’re signed up with a good broker. You will be required to credit your account with at least the minimum deposit stated by the broker. After this, you’re ready to trade.
Select the USDSGD from the quote
After funding your account, your balance would be displayed on your dashboard. Click on quotes and select the USDSGD pair from the list.
Read the figures to determine your expected profit
Check the buy and the sell price to calculate the spread. The spread is the difference between both prices. It represents the broker’s fee for that trade.
Place your trade
There are 2-positions which you can place your trade: the BUY and the SELL position.
In the buy position, you expect the price of the base currency(USD) to go up, while the quote currency(SGD) weakens. In the SELL position, you speculate the opposite.
Here’s what to expect from our recommended brokers:
Markets.com
- Minimum deposit
$100 is the initial minimum funds accepted. The broker provides multiple deposit channels to make it easy to fund accounts. Credit, debit cards, and wire transfers are accepted.
- Regulation
The broker is authorized by well-known global financial bodies such as FCA in the UK, ASIC in Australia, CySEC in Cyprus, and the South African capital markets regulatory body, the FSCA. It gives the assurance that traders’ funds and data are secured.
- Spreads and fees
Spreads on major currency pairs start from 0.6pips. There are no charges on deposits or withdrawals. Swap fees may apply for some assets.
- Commission
There is a $15 minimum charge for CFDs.
- Maximum leverage
1:400 is offered. This gives you the opportunity to bet high stakes with low capital. But be aware that trading with high leverage exposes you to greater risk of debt in case of loss.
- Platforms
Multiple trading platforms are available to trade with. They include Mt4, Mt5, MarketX, Marketsi.
- Assets
The broker offers 67+ forex pairs with other assets such as indices, stocks, commodities.
- Support
24-5 customer service is provided via phone, live chat, and email. No matter what time zone you use, you will have access to customer service when you trade.
- Loss rate(Retail customers)
Like every other investment, your capital will be at risk if you sign up with this broker. 67% of retail traders lose their funds trading with markets.com
Pros:
- Competitive spreads
- Free demo
Cons:
- High fees on commodities and indices
Vantagefx
- Minimum deposit: $200
- Regulation: Asic Cima
- Spreads and fees: From 0pips for major pairs
- Commission per lot: $6
- Maximum leverage: 1:500
- Assets: 40+ forex pairs, CFDs.
- Platform: Mt4, Mt5.
- Support: Available 24-5 through phone support, live chat, or email.
Pros
- Low spreads
- Good customer support
- Copy trading is available.
Cons
- Limited assets to trade.
Roboforex
- Minimum deposit: $10
- Regulation: IFSC, CySEC
- Spreads and fees: From 1.6pips
- Maximum leverage: 1:2000
- Platforms: Mt4, Mt5, cTrader, RTrader
- Assets: 40+ forex pairs, metal, energy, gold, stocks, indices, and cryptocurrencies.
- Support: Available through email, phone, and live chat throughout the weekday.
Pros:
- A low minimum deposit makes it easy to start trading.
- Free demo is offered
Cons
- Phone support is not available in some regions.
Strategies for trading USDSGD pair
Some strategies are better with this pair than others.
Below, we take a look at helpful approaches to trade the UsdSgd successfully.
Range trading strategy
The range trading strategy is favorable to this pair since the price tends to fluctuate within near predictable ranges. More often than not, the price moves between 2-points, recording no higher highs or lower lows, making it a great pair for range trading.
The range trading approach can work with any timeframe. To use this strategy, you need to first identify the range within which the price moves.
You will find your range where the price has recovered from the support level and retreated from the resistance area several times, at least twice.
Once you identify the range, this will be your entry point. You can then buy at support or sell at resistance. Or you can place a limit order in the opportune direction. Once the price reaches resistance or supports, your orders will be filled.
Relative strength index range trading
Relative strength index, also known as RSI, is an indicator that can be used in range trading strategy.
Apart from spotting support and resistance levels, you can also use the RSI to check for overbought or oversold conditions in the market.
The formula for computing the RSI is:
RSI = 100 – 100/(1 + RS)
where RS = average gains over × periods/ average loss over × periods
The RSI shows you the percentage of gains and losses for the buy and sell prices. That is, it tells you if there were more BUYs than SELLs for that exchange rate or vice versa.
Its value is shown between 0 and 100. This figure is in percentage. If the RSI indicators read above 70, at the top part of the range, it signifies that the UsdSgd is overbought.
The overbought signal suggests that the uptrend may be nearing its end. And it is time to either exit a BUY trade or enter a new position in the opposite direction.
If the indicator reads below 20 at the bottom of the range, it means the pair is oversold. That is the downtrend may be ending soon, and the price will begin to move up. An oversold market is a signal to enter a BUY position or exit your SELL trade.
The RSI signal is reliable, and traders use it often in range markets. The only drawback is its irregular signals, which could make it a bit difficult to read.
Range breakout strategy
The price range goes on for a period. After a while, the price moves beyond the points of support and resistance. That is, either higher than its former high or lower than its previous low.
From time to time, this happens with the USDSGD pair. But merely moving beyond its previous point might not indicate a breakout. Sometimes, prices revert to the predominant range.
So when you spot a movement in price beyond its range, it’s always advisable to wait and monitor the market before placing your trade.
A continuous rise or drop in a trading period may signal a genuine breakout.
So if the end of the trading period, the price maintains its new level, which may be an actual breakout. And a signal to enter the appropriate position.
Bollinger band trading
The Bollinger band is a technical analysis tool used in identifying if the asset is overbought or oversold. It is also used to measure market volatility.
The band has 3-lines in your trading chart. The middle line is the Simple Moving average (SMA), that’s the average price within a specific period, usually 20-days.
The other 2-sides are the Bollinger band, upper and lower. And the volatility of the market determines how wide they appear. On the chart, it is shaped like an envelope.
To trade the UsdSgd with it, watch for price movements toward the upper or lower band. If the price moves to the upper band often, this shows that there’s an uptrend. If the price drops to the middle and rises again to the upper band, it’s signaling an uptrend. And might be a good time to place a BUY trade.
Note that, in the above case, it should not be taken an uptrend if the price drops below the middle. In a genuine uptrend, the price will not touch the lower band. If it does, this might be a signal that there may be a reversal soon.
Though this approach is suitable for any timeframe, it is not as reliable as the RSI strategy. So traders combine it with other technical indicators to get stronger signals.
The UsdSgd pair hardly trends in a specific direction. But when it does, this indicator can help trade the pair.
Trading News releases
This strategy involves trading the UsdSgd pair based on the news releases. The news can form market expectations, bring about new trends, strengthen the ongoing one, or lead the market in any particular direction.
With the news, traders can foresee market reactions and use them to their advantage. One great way to trade news releases is to pay attention to what the analysts say.
In the financial market, there’s a saying, “buy the rumor, sell the news.
This phrase came about from big players in the market acting on rumors from the analysts before the actual news is released.
For example, if analysts predict a rise in the unemployment rate in the US. Traders may expect the dollar to weaken because of a weak economy. With this, they start to go SHORT on currency pairs like UsdSgd.
When the news is released, their trade would’ve matured, and they would be collecting their profits.
But if it turns out the analysts were wrong, and there was a drop in unemployment rate instead, they would quickly exit that trade and enter a LONG position.
This is considered the best way to use this approach. But it requires skills and good knowledge of how the forex market operates. That’s why it is not recommended for inexperienced traders. It may also carry more cost and risk since some news may necessitate leaving your positions open for a few days. Your trade is then exposed to overnight fees and risks.
Another way to trade based on the news is to wait for the actual release, predict the market response, and take your position.
The trader will have to be capable of receiving the news as soon as it’s released. And they would have to evaluate it quick enough to determine the market’s reaction.
Trading the news can be extremely profitable with this pair. A skilled trader can find many opportunities in this strategy as economic data is released daily.
Price action strategy
In the price action approach, your trading decisions will be based on recent price movements in the market.
Traders who use this strategy are not interested in technical analysis. A glance at the price chart and an experienced price action trader can identify patterns in the market.
The strategy is founded on the belief that the price chart shows all market reactions, so there is no need for other analyses. Economic data and news releases drive the market’s reaction. And all of this is reflected in the price chart. Therefore, one can trade the market successfully by focusing on solely price movements.
Price action is the most common trading strategy for all pairs because it is easy to use and beginner-friendly.
All you need to do is look at the price chart. If the price action indicator suggests an uptrend, you might want to enter a long trade. If it’s a downtrend, a short-trade will bring your profit.
Price action indicators are also called price action triggers or signals. They include:
The candlestick indicator
The candlestick, also called the pin bar, shows you crucial information such as opening price, closing price, and highs and lows within a specific period. It is often characterized by a ‘wick that indicates strong price rejection.
The wick, or tail as it is sometimes called, indicates the price that was rejected.
A longer wick at the top is called a ‘bearish pin bar’ and expresses that a rise in the price was rejected. This reads that the prices may drop soon.
A longer wick at the bottom of the candle is a ‘bullish pin bar. It indicates a rejection of falling prices, meaning that prices may rise soon.
To trade any of the pin bars, enter the appropriate position at the current market price. Ensure that you wait for prices to fully form. That is, allow the wick to increase to its adequate length. Then enter a position from the mid-point of the body of the candlestick.
This approach is most suitable for a trending market. For the UsdSgd, it can be applied to short-term trends.
An inside bar pattern
The inside bar of a price chart contains 2-bars. You can identify this bar in your candlestick chart, where a bar’s high and low is held back by the bar directly in front of it. This indicates a consolidation in the market price, where the prices are neither going up nor coming down.
Traders see this as a signal for price breakouts and plan their next entry point. Looking at the price movements for a specific period up to that point will help you determine the opportune position.
Note that a breakout may not necessarily mean a change in direction of the movement. Sometimes, the ongoing trend continues.
The approach works for the UsdSgd cross if the timeframe for your trade is at least longer than 1-day. Inside-bar trading is not ideal for intra-day trading.
None of these strategies are perfect, but they can help you trade the pair successfully. As long as you take appropriate risk measures and know their shortfalls.
Now that you understand different approaches to trading the UsdSgd, we will explain how to start trading.
Conclusion
The USDSGD offers traders an excellent opportunity to diversify their forex business. The pair is suitable for different styles of trading. Whether you prefer technical analysis, trading news releases, or natural trading (price action), you will find many opportunities to increase your profit and portfolio with this pair.
Taking the appropriate risk measures and using the right strategy in an accurate timeframe will ensure successful trading.
English