The Dragon, The Monster, The Geppy, The Widow maker.
Those are not names for mythical swords, action heroes from movies or Game of thrones characters; they are all nicknames for the British Pound & Japanese Yen currency pairing.
At this point, you might be wondering what on earth prompted such nicknames, well, to sum it up in a single word: Volatility, to sum it up in 2 words: Incredible volatility.
Other pairings offer great liquidity but low volatility, which is a chance to plan your moves ahead and think long term profits, this pairing however works the other way around – relatively low volume of trades but volatility which can sometimes be described as “extreme”, this may lead to great profits in a short amount of time, but as with everything else, with reward there’s always risk.
In a break from our traditional articles, we should point out that this specific pairing is not to be taken lightly. If you’re just starting out in the binary options world and pairings are your main area of interest you would be best served dipping your toes with a different pairing, get to know the way things work and once you’ve done your homework, move on to the GBP-JPY binary options where you can master your craft on the perhaps the most difficult stage.
That being said, we should also point out that if you’re all for a “devil may care” attitude and approach, and value “on the job” lessons along with making great profits in a hurry, risk be damned, this pairing will do the trick nicely – it will certainly teach you about market moves and how they affect currencies, and do so in a hurry.
As with any currency pairing which includes the Yen, the main driving force is the bank of Japan, as Japan focuses its economy towards exporting it goes to great lengths to maintain control over the Yen, always striving to keep it in a state of underperformance when compared to other currencies, especially versus the US Dollar.
On the face of it, that may seem like a legitimate financial strategy, but when concerning binary trades it is the cause of many headaches. On the one hand, you can pretty much rely on the Yen to be kept low, which can assist you in making some trades.
On the other hand, that almost constant restraint is the very reason the Yen sometimes does not show its true strength in markets even when it is almost required or expected, certain market events or conditions are expected to have an effect on the Yen but the extent of the effect can be nullified by the BOJ.
While in the past UK-Japan trades were far more common and valuable to both economies, that trend has been in decline mostly due to the rise of the Euro which provides both countries a preferable trading partner – Japan gains more by exporting to an entire block of nations with greater financial might, while the UK has a trading partner that is geographically closer making related costs (such as shipping) far lower.
The countries maintain trade relations and still operate accordingly, but as far as the impact on the currency pair – it is not that great, the real indicator here is simply financial news out of each nation and their impact on the respective currency.
Dip your toes carefully in these deep waters, increase your binary trading skill and pretty soon you should be able to defeat “the widow maker” and turn a profit.