The foreign exchange trade is a challenging market.
It is not for the ignorant and unprepared. Research is a vital tool. You must be well informed to make smart decisions.
The USD/RUB is, especially, trickier to trade. But do not worry. We have put together this guide to help you trade this peculiar currency pair.
Read on and learn how to trade the USD/RUB and what factors can affect the exchange rate.
What is the USD/RUB?
The USD/RUB stands for the currency exchange between US Dollar and the Russian Ruble.
In this pairing, the US Dollar is the base currency. Whereas, the Russian Ruble is the quote currency.
It determines the number of Russian Rubles needed to buy one US Dollar.
For example, if the USDRUB is trading at 75, it means that 1 US Dollar is equal to 75 Russian Ruble.
Let us take a look at the history of the Rubles and the US Dollar. Also, let us discuss the state of the economy of both countries.
The Ruble or rouble is one of the oldest currencies in the world that is still in use. The other being the British Pound Sterling.
The Ruble is the legal tender of the Russian Federation. It dates back to the 1200s during the reign of Tsar Peter I.
The Ruble underwent many reforms over the centuries. It was minted in silver and then in gold after several years.
During the First War, paper notes replaced the Ruble. And during the Russian civil war, its value plummeted so low, it was almost valueless.
After the Second War, the Ruble regained its value. The government made it the country’s official currency.
As old as it was, the Russian Ruble was only allowed to float in 2014. As a floating currency, its value is reliant on the supply and demand in the forex trade.
The right to print and issue the Ruble lies on the Central Bank of the Russian Federation.
The Russian Ruble is 18th on the most traded currency list. It produced 0.70% of the total currency turnover, according to recent data.
Russia is significantly bigger than the United States. It is the largest country in land area.
In the early to the middle of the 20th century, Russia’s economy was booming. They had high production in gas, oil, and minerals. They were one of the leading countries in chemical and electric engineering.
But by the end of the century, it experiences an economic decay. To combat it, the government enforced several reforms.
In 2020, Russia ranked 11th in the Gross National Product.
United States Dollar
The US dollar is young compared to the Russian Ruble. The former has only been around for 200 years, while the latter is 800 years old.
The first US Dollar that was printed was the two-dollar bill. But it did not become their official money then.
During the American Civil War, there was a demand for paper money. So, they printed the American Dollar Bills.
The bill was known as the Greenbacks because of the dominant green color.
Since then, the US dollar was were widely used.
After the World Wars, in the 1990s, the Allied Forces drafted the Bretton Agreement. It made the US Dollar the official world reserve currency.
It is on account of the prevailing power of the US in the economy.
United State Economy
The United States economy started a drastic change after the civil war,
It was a period that some refer to as the 2nd Industrial Revolution. The country discovered oil and coal, which increased its mineral production.
Also, inventions like the telephone and electricity were introduced.
The US experienced some ups and downs. But it has thrived.
Today, it is the largest economy in the world. The US Dollar is the most traded currency in the world.
What are the factors that affect the USD to RUB exchange rate?
Before trading, you should know what affects the currency you will be buying and selling.
Often, these factors cause unpredictable changes that can either mean potential losses. It is vital that you study them so you can read the signs and plan your strategy.
Since the US Dollar is s fairly stable economy, most of these factors affect the Russian Ruble.
Unfavorable political actions tend to dissuade foreign investors. It decreases the demand for the local currency.
Russia maintains an aggressive political stance under Putin. Experts claim that Russia’s seemingly stable political environment is hiding civil unrest.
There is various news about protests on several governmental reforms. Some of these relate to pensions and press policies.
Civil unrest can cause political turmoil. It can lead to instability of the national currency.
Another political factor is the relationship of Russia with the United States. This relationship is tenuous and often unpredictable.
Economic sanctions are penalties imposed by a country to another. It used a political tool used to exert economic and political pressure.
The United States uses economic sanctions if there is a breach in agreements.
In 2014, US President Obama issued a sanction against Russia. This is in response to its military occupation of some parts of Ukraine.
The sanctions included:
- Suspension of trade and investment agreements
- Military cooperation
- Suspension of political meetings
- Band on exportation licenses for products going to Russia
Following the ban issued by the United States, the European Union followed suit.
This a big brought economic challenge to Russian. Although it has other trade partners, the US and EU are one of its major partners.
Economic sanctions limit trading capabilities and decrease the Gross National Product. It, in turn, leads to a lower currency value.
The 2014 sanctions resulted in a decrease of 46% in the value of the Russian Ruble against the US Dollar.
The economic environment of a country will affect the value of its money.
If a country has a thriving economy, it will experience a rise in its currency value.
Here are some indicators that might tell you the economic performance of a country.
Gross National Product and export volume
With the lockdown restrictions brought by the pandemic, the global export trade suffered.
The economy of Russia is dependent on exportation. The lockdown has affected them greatly. In 2020 their GDP decreased by 3%. It is equal to billions of dollars.
But the economy is learning to adjust to the new trend.
Russia was able to start digitization before the pandemic. It helped them function and operate well until now.
The government also has ample financial buffers that keep the economy afloat.
The inflation rate has an indirect relationship with the exchange rate.
If there is a high inflation rate, the central banks will intervene. They will increase the interest rates to restore balance in the economy.
A high interest rate will attract foreign investors. This in turn raises the demand for the local currency. It increases its value in the forex trade.
Natural disasters and calamities tend to affect the exchange rate negatively.
The Covid 19 pandemic is probably the most widespread global disease outbreak. It took the world by surprise.
It is creating a new normal that we are only getting to know.
It also caused volatility in the forex market that has never been experienced before.
While volatility creates windows of opportunity, it also makes the maker riskier.
Traders have to be smarter and more alert than ever because of the level of unpredictability.
Bank policies and interventions
Central banks have a hand in managing the economy.
If there is an impending or actual economic crisis, they will intervene. Banks can put in place policies to avert the crisis. These policies can cause fluxes in the currency value.
Currency correlation is the relationship of a currency pair to other pairs. The up and down movement of other currency exchanges can affect the USD/RUB.
Correlation can be positive or negative.
A negative correlation means that if one pair moves up, the other pair moves down.
The USD/RUB has a negative correlation with:
- AUD/CHF -63.4%
- NOK/SEK -73. 3%
- NOK/JPY -81.9%
Positive is the opposite. If the exchange rate of a pair increases, the rate of the other will also rise.
The USD/RUB has a positive correlation with:
- EUR/NOK 78.7%
- EUR/SEK 79.1%
- USD/NOK 82.3%
When is the ideal time to trade USD to RUB?
When trading USDRUB, there are no fixed peak hours.
Because this is an exotic pair, there is less liquidity. It means that there is a low level of activity.
But that doesn’t mean that it doesn’t have a lot of opportunities. Because there is low liquidity, it is more volatile.
Smart traders know to take advantage of volatile times to open their positions.
How to trade USD/RUB through RoboForex
This section gives you a step-by-step instruction on how to trade USD/RUB through RoboForex using the MetaTrader4 platform.
RoboForex is one of the leading forex brokers. It offers low spreads and various choices of excellent trading software.
The software or platforms they use are:
Open an account
- Go to RoboForex.com.
- Click on the Open Account button on the top right of the page.
- Fill out the necessary information.
- You can choose between demo account and live trading account.
Demo accounts are used in three ways:
- Help beginners learn the basic concepts of trading using virtual funds.
- Testing out conditions of your broker.
- Testing out new strategies.
Live trading account
If you want to register to a live account, go to your dashboard and click on members area.
Select live Account and fill out your desired parameters.
Click confirm to create live account.
- Go to RoboForex.com.
- Click on Trading section on the top.
- Select platforms and click on MetaTrader4.
- Click on Download MetaTrader4.
- After downloading, allow installation.
- Open MetaTrader4.
- Click on tools in the tool bar.
- Select new order. This will open a window.
- Select USD/RUB in the currency pair drop down menu.
- Place the volume of trades you desire.
- Fill up the number of pips for stop loss and take profit (optional but recommended). Stop loss is the price at which the trade will close if the market is against you. While the take profit will lock in a profit.
- The comment allows you to leave notes for each trade.
- You will choose between instant execution and pending order.
- The instant execution will place your order once you click buy or sell.
- The pending order will only be placed if the price hits your desired amount.
Keep track of your order
You can monitor your order or orders in the terminal window. Click control button + T.
If you wish to terminate an order, click on the x on the right portion of the order.
You can modify your parameters by right clicking on the order and selecting modify.
Editing the chart include customizing it. You can add objects or indicators to help you keep track of possible signals.
The tool bar allows you to draw and insert various objects.
The technical indicators are vital tools in trading. They will help make an analysis of the market and aid in decision making.
Go to the navigator window. Under the indicators select your desired tool and drag in on the chart.
You can change the timeframe view of the chart by right clicking on the chart and selecting timeframe.
You can choose from one minute to one month.
Strategies in trading USD to RUB?
The USDRUB is a lot trickier to trade than the major currency pairs. It is sensitive to a lot of political and economic aspects.
Here are some guides on how to trade it to reap the most gain and reduce losses.
Because there are more challenges with this pair, earning more experience is advisable.
That is not to say that newbies cannot trade this pair. But it will be easier if you have a prior trading background.
Experience gives you a better handle on your trades. It helps reduce nerves.
Most new traders are jittery. They easily waver in their positions. If there are drastic movements in the price, they change their position immediately.
It is not a good trait for a trader. It can cause potential losses.
Design a specific plan
There is no standard trading style that you can adopt when trading USDRUB. It is mainly because it has unique factors that impact it.
Here are some tips that you can do when outlining your plan:
a. Do you research
Research is a vital part of trading. Research keeps you informed. And if you have all the information, you can make better decisions.
Read about the current economic trends in Russia and the United State.
- How is their economy fairing?
- Is there an increase or decrease in their recent GPD?
- How are their trading relations with other countries?
- Are they experiencing an inflation?
- Do they have high or low-interest rates?
- Do they have a high or low unemployment rate?
- What are the current monetary policies enforced by their central banks?
- Does the price of goods affect their economy?
- Do they have economic buffer?
You should also do research on the political and social environment of both countries.
- Do the countries have diplomatic relations?
- Did the US or any country issue any sanctions against Russia?
- Are their civil unrest and other forms of political turmoil?
- Are they involved in any war or military invasion? Do they have a political quarrel with each other or other countries?
- What is the stand of the countries in global political and social issues? Are they vocal about these? Can these affect their international relations?
- Are they susceptible to natural disasters?
b. Set your timeframe
One strategy is setting your timeframe. You can trade by the minute, by the hour, in a day, in a week, or a month.
There is no best timeframe. It depends on the currency pair you are trading and the factors that affect it.
c. Risk management
Risk management involves the assessment of influencing factors. It also includes the actions taken to reduce them.
You cannot control some factors like political issues. But you can control when to enter or exit a trade. You can also control how much to trade.
Risk management strategies can help avoid or reduce your losses.
Track pip value
Pip value determines the rate of rising or falling of the exchange rate.
The pip will tell if a trader gained or lost in a trade.
Let us illustrate.
Say a trader bought a Russian Ruble by selling USB/RUB at 75.01. He then closed the trade at 75.04. He losses three pips on that trade.
But if he closes the trade at 74.8, he makes three pips.
It does not look like much if you are looking at the numbers. But at a larger scale, one can make a lot of profit from 3 pips.
Look at correlated currencies.
Know what currency pairs are correlated with USDRUB.
Track the exchange rates of these pairs. If there are changes, the rate of USD/RUB may also change.
Doing this can give you an idea if you need to enter a trade, hold it or close it.
Be familiar with using technical indicators.
Technical analysis indicators help you assess the trend. It can give you an idea of the volatility of the currency exchange at a given time.
Here are some indicators that you can use.
a. Moving averages
It measures in real-time the average of currency exchange rates. It shows you the direction of the trend, whether it is moving up or down.
It can also show you the current state of volatility.
Look at the USDRUB chart. If the moving average moves away from the current price, then there is high volatility. If the line comes near the price, then the volatility is low.
b. Bollinger bands
Bollinger bands are specifically designed to measure volatility.
When using it, you look at three lines on the USDRUB chart.
The middle line is the simple moving average.
The two outer lines are your indicators. They run alongside the simple moving average at two standard deviation distances.
If the outer line moves toward each other, it means low volatility. If the lines move away from each other, it means high volatility.
c. Average true range
The average true range is like the moving average. But while the MA is the mean of the price, the ATR is the mean of the price range.
So, if the ART line moves up, it means high volatility. If it moves down, it means low volatility.
Being an exotic currency, the USD/RUB carries more risks than the major currency pairs. It is sensitive to political factors.
But on the bright side, the high volatility also opens windows of opportunity for higher gain.
When it comes to trading, there is no perfect formula. It takes experience, research, and good instinct to succeed.