What currency is less risky to keep as base?

I trade mostly trade with EURUSD, USDCAD.

 

I also mainly use standard currency pairs, which are very popular.

 

Currency risk can be reduced by hedging, which offsets currency fluctuations. If a U.S. investor holds stocks in Canada, for example, the realized return is affected by both the change in stock prices and the change in the value of the Canadian dollar against the U.S. dollar. If a 15% return on Canadian stocks is realized and the Canadian dollar depreciates 15% against the U.S. dollar, the investor breaks even, minus associated trading costs.

 

Hedging sounds good but I have never seen a good example of it except for oil refiners that hedge against price flactuation with certain things (I forgot what it was) and even then most of them lost over this year as they didn't hedge enough.

1- In your example of Canadian stocks, what would you do to hedge?

2- Hedge eat potential profits. It's not all bad though as it is like playing only odd-even AND/OR red-black on a roullette table instead of the numbers. Long and slow but wins mostly.

 

To find my current preferred pair for trading I look at the 50EMA slopes on the D1 chart at the latest close. As to whether this is upwards or downwards it will be therefore either bullish or bearish for the base currency and bearish or bullish for the counter currency.

As each of the 8 major currencies appears in 7 of the 28 leading pairs, this gives a score per currency, out of 7, of up to 7 bullish 50EMA slopes and up to 7 bearish 50EMA slopes. The strongest currency is indicated by a score of 7-0, the weakest by a score of 0-7.

Its probably no surprise that for some time now NZD has been scoring 7-0 and USD 0-7. My favourite trade therefore right now would be long NZD/USD.

 

I am doing m trades in the EURUSD and the GBPUSD as they are mainly traded currencies and so the Intra Day movements are very high.

 

It also seems to me that these are currencies that are really the most optimal.

 

The Eurodollar pair is really the best option for it to be basic.

 

I liked trading EURUSD the most. Firstly, this pair is not very volatile, it moves more smoothly, so stop losses can be set small, which is very profitable. Secondly, my broker fxopen has a very small spread for this currency pair (1-2 pips), which is also profitable when trading intraday, when you make quick trades for a small number of points.

 

Many traders stick to USD as a base currency, as it's the most liquid and widely traded. However, some prefer their native currency or another strong one like EUR or GBP for simplicity. Ultimately, it’s about personal preference, strategy, and market conditions, with flexibility for arbitrage opportunities.