Exotic Currency Pairs: USD/HKD
Christopher Lewis | May 24, 2015 12:30AM ET
The USD/HKD pair isn’t one that a lot of you pay attention to, and that’s too bad. Exotic currency pairs can be a great addition to your portfolio. Unfortunately, exotic currency pairs tend to get a bad rap, with the larger spreads. However, there are a few things to consider: the pip value is smaller often, and they tend to be more trending over the longer-term. The Hong Kong dollar is, of course, fixed to a specific range, and this allows a certain amount of predictability when it comes to trading it. In fact, it can be a very lucrative pair to be involved in – if you can be patient enough. This, of course, is a big problem with most of us forex traders, as we initially get involved in this market because of the lure of quick returns. This pair, on the other hand, tends to be one that we can simply place a trade in, and walk away. It is almost unnatural for most of us to do this, but I can assure you that a large amount of my returns every year are based upon longer-term trades.
Exotic Currency Pairs tend to have steady ranges…
This particular pair seems to be bound by the 7.75 level on the bottom, and the 7.77 level on the top. This has been the case for the last three years at least, and this of course is part of what makes this market so interesting for us. The market is currently testing the 7.75 level on the bottom again, and as a result we think it is only a matter of time before we go back towards to the 7.77 level. This is the market area that we are so stuck in, and Chris and I both think that this is about as close to a “sure thing” that we can get in the markets. After all, the Hong Kong Monetary Authority will have to lift the trading band limits – or lower them – in order for this market to break out of the range. So in that sense, it will only be a matter of time before we go higher.
With this being the case, I have already placed a long position on. I will simply let it go, as I am about as confident as I can be that this trade will eventually work out. In the end, these are the types of markets that so many people ignore, but can be so good to your account – if you can only just be patient enough. The market has been quite happy to sit in this area for years, and there is no reason to think that this will change anytime soon.
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