How to trade USDRUB? - features of the national currency, secrets and chips
Hello friends forex traders! Of course, each of us is a patriot in our hearts, this cannot be taken away. But, unfortunately, it so happened that the course of our native Russian ruble is unstable. What can we do about it? Globally - nothing, but you can earn on fluctuations in the exchange rate of the Russian currency through trading on the USDRUB pair.
But here, not everything is so simple. There are many nuances that you should know before opening positions on the ruble. Today we’ll talk a little about the economy of the Russian Federation, about what affects the USDRUB exchange rate, the volatility of this pair, the influence of oil (where it is already without it), and most importantly, what trading strategies to apply in order to make a profit.
- Recessions and correctional cycles of the Russian economy
The Russian economy as a whole demonstrates high income indicators, representing a mixed type of economy, which in turn implies the presence of state ownership in strategic commercial sectors. Market reforms of the 1990s opened up high prospects for privatization in various sectors of industry and agriculture, excluding, however, the sectors of energy (partly) and defense industry.
Among the largest economies in the world, the Russian one stands out for its reliance on income from energy exports that stimulate its growth. The country has many natural resources, including oil, natural gas and precious metals, which make up a critical share of Russian exports. Revenues from oil and gas exports, on average, account for 16% of GDP, half of federal budget revenues and more than 70% of total exports.
Also, Russia has large industries engaged in the design and manufacture of sophisticated weapons. The value of Russian arms exports amounted to $ 15.5 billion. According to 2013 data, the United States has a large share of income from arms supplies. The best military exports from Russia include combat aircraft, air defense systems, ships and submarines.
In 2014, the Russian economy was the sixth largest in the world in terms of PPP and tenth in terms of market exchange rates.
The monetary unit of the Russian Federation is the Russian ruble. The ruble is also the legal unit of payment in Abkhazia and South Ossetia.
The Russian monetary system (issuing, monetary) is regulated by the Central Bank of the Russian Federation (Bank of Russia). Founded on July 13, 1990 by order of the Supreme Council of the RSFSR, the Bank of Russia, first called the State Bank of the RSFSR, assumed the obligations of the central bank after the collapse of the Soviet Union in 1991.
The firm linking of the Russian economy to the export of energy resources makes the Russian currency vulnerable to cyclical fluctuations and downturns, meeting the demand of major importing partners and the geopolitical environment that regulates international trade relations.
Another reason for the instability of the Russian currency is the growing distrust of both domestic and foreign investors in the ability of the Bank of Russia to act quickly and efficiently, within the framework of the correlations characteristic of the Russian currency with the well-being of the energy industry - Russia has a reputation for currency crises and Black Tuesday. Often inadequate to the global market dynamics, key interest rates help to close the ruin of banks and enterprises, which often find themselves in a situation of insolvency and cut off from external sources of financing due to various geopolitical factors.
The most obvious economic situation for Russia: significant growth due to demand for energy from international trading partners and, accordingly, a decline due to lack of demand. Each new resumption of the trend of slipping commodity prices puts the Central Bank in a hopeless situation, destabilizing the ruble and inflating inflation with eroding consumer and purchasing power, in particular, due to a number of sanctions imposed on the country from time to time by the international community due to a rather aggressive foreign policy.
- Russia and oil
Modern Russia is even more oil-dependent than, say, the Soviet Union. Oil and gas currently make up about two-thirds of Russia's exports. As much as 70% of Russia's GDP today is "oil dependent" (including government spending, which is 60% funded by taxes from the oil industry). Most Russian economic sectors — international reserves, exchange rates, government revenues, and, in fact, GDP itself — strongly correlate with oil prices.
- Geopolitics and its influence on ruble growth
The Russian ruble, as mentioned earlier, is a commodity currency, so the dynamics of its exchange rate will largely depend on world prices for raw materials, including oil and gas. The ruble is not alone in such a connection - take at least a currency club consisting of the Norwegian krone, the Kuwaiti dinar, as well as the Australian and Canadian dollars. These currencies also remain dependent on energy. Nevertheless, their fluctuations are much less pronounced than that of the Russian ruble - why so, we tried to explain above, affecting the geopolitical nuances affecting the commercial activities of Russia.
We emphasize once again that the disproportionate share of the oil and gas industry within the national economy of Russia, focused on export and replenishment of budget revenues, is an unacceptable foundation for the seventh largest economy in the world.
Also, we should not forget that today the Russian ruble, although it meets the criteria of a freely convertible currency, as provided for in the charter of the International Monetary Fund (IMF), however, does not have sufficient credit history, being used insufficiently in the global economy, and remains a newcomer to the world financial markets.
The openness of the Russian financial market to foreign players also makes the ruble an unstable currency attractive to speculators.
It is worth mentioning, of course, that the role of oil prices in the exchange rate of the ruble is very often a little exaggerated. But even assuming that the Bank of Russia deliberately softens its monetary policy in order to keep ruble revenues from oil exports in a stable position, its actions may provide grounds for holding the currency crisis in the country. Restructuring of key areas of industry, liberalization of the country's foreign policy activity and easing the pressure of geopolitical interests on the commercial sphere, of course, could have a necessary effect on the recovery and stabilization of the national currency, but it does not indicate any prerequisites for a similar scenario for the development of further events.
Currency pair USDRUB
The global trend of our currency is directed down. And the pair USDRUB, respectively, up:
The dollar is getting more expensive, the ruble is getting cheaper. This global trend is characterized by sharp jumps approximately every 5-7 days. If we recall the crises of 1998, 2008, 2014, then on the whole there is an opinion that the country is constantly in crisis, and it does not come out of it. Let's move on to the technical aspects of the currency.
USDRUB swaps are small. For short positions, they are approximately 1 point, and for long positions - 2 points.
I don’t see any strategy on swaps here, they won’t make strong weather, but we can, without paying attention to them, hold positions for several days.
On the chart, one point of currency is equal to one penny, which makes their calculation convenient. Therefore, we do not pay attention to the third digit after the decimal point. How many kopecks a currency pair went through, so many points made up its movement. The most active Russian currency during trading on the Moscow stock exchange. This happens from 10:00 to 19:00 Moscow time. Then comes the evening session until midnight with short breaks. At the same time, trading time with different brokers may vary. And this is worth considering.
Commissions and spreads on the USDRUB currency pair are very dependent on the current state of the economy. When the economy is very stormy, the spreads can be prohibitive and unsuitable for trade. Therefore, when you open a deal, look at the commission and spread, especially if something happens in the economy of our country. For example, some new sanctions are being adopted or the Central Bank announces some kind of decision on the interest rate. Always check the spreads and commission, as these days they can be very high.
Once again, I want to remind you that the USDRUB currency pair is not for beginners. Volatility is about 30 kopecks per day, but on the condition that we take an extensive period of time. On days of increased activity, when the economy is storming, the currency can jump several rubles up and down, which corresponds to several hundred points.
The most volatile days are Monday and Friday:
Increased activity is observed in the first few hours after the opening of the market and at the beginning of the evening session, after 19:00 Moscow time.
If we consider the days of the month, then the most volatile are the days from the 24th to the 31st.
Speaking about USDRUB quotes, it is impossible not to affect the correlation with oil.
On the upper chart, we have the USDRUB currency pair open at H1, and at the lower chart, Brent crude oil quotes. Although Russia exports many brands of oil, such as Urals, REBCO, Sokol and many others, investors usually look at Brent quotes. Since it is she who trades on international markets.
What can we notice on the graphs? If oil falls, the USDRUB currency pair rises. With the fall in oil prices, the Russian ruble is becoming cheaper, and the dollar is getting more expensive.
The dependence is visible not only on hourly charts, but also on daily charts:
Since the trading time for the Russian ruble and oil is different, I would advise you to monitor oil quotes at the very moment of your trade.
Imagine that you are now trading USDRUB and at the same time looking at oil quotes. If any strong movements occur, then we make decisions according to the situation. Everything is actually very simple and is expressed in a simple ratio. If oil becomes cheaper, then USDRUB rises, and if oil rises, USDRUB falls.
At the same time, technical indicators showing the correlation in the moment should not be used. Due to the different number of candles involved in trading, incorrect and false data may appear on different instruments. Therefore, view the charts manually. In this case, everything is visible with the naked eye.
Remember that oil should be primary for you. If you noticed any movement at first in oil quotes, but this did not have time to reflect on ruble quotes, then perhaps it is time to open a position.
What news affects the Russian currency?
I think that any of our readers will be able to answer this question.
This currency is affected by news about oil, APEC’s decision to limit oil production, news about geopolitical issues, namely the introduction of sanctions and their lifting. Of course, now, at the moment, such conversations are not conducted, but in the future, it is quite possible that one of the two can happen. Also, general data on the country's economy affect the USDRUB currency pair.
You can watch the news on all known sites finam.ru, RBC and so on.
Any large portal about economics and finance is suitable. In the economic calendar, the news that affects the Russian ruble does not show.
Paying your attention to the news on the American dollar is also not worth it. If, in the case of other currency pairs, when news is released that may adversely affect the currency, we try not to trade, then they do not affect the Russian currency. I think that this can be counted as a plus.
Thus, when trading USDRUB, try not to pay attention to the economic calendar. Follow only the news, which will reflect only the economic changes in the country.
Strategies for USDRUB
Let's move on to the main thing, namely, trading strategies on the USDRUB pair.
In this currency pair, the market is very speculative, therefore, even despite any positive or negative news, the movements can be in any direction. This is worth remembering when trading.
Please note that price gaps after closing and, accordingly, after the opening of the market do not close, as in other pairs. More precisely, they close, but not always. Therefore, if you saw the gap, then trade in the opposite direction and count on its closure is not worth it. This strategy does not work on this currency pair.
It is worth paying attention to breakdown strategies designed to open the market. Namely, it is possible to calculate the range that is significant for a given currency pair. And when it is broken, enter this direction. As a rule, after some fluctuation during the day, this currency pair shows a single movement. Of course, this does not always happen, but you can make money on it.
In the first one to two hours, fraudulent movements usually occur. Therefore, if you see that the chart is moving up, then watch for the opportunity to open a sale and vice versa:
Thus, very often, a couple throws out not too experienced traders, and then continues its movement in a different direction. Another interesting strategy is to leave deals overnight in the direction of the current trend on H1.
That is, according to the hourly charts, we determine the dominant trend that was on the current day and put a pending order in the same direction. Or immediately open, without waiting for the close of the day. As a result, when the price breaks our pending orders in the first hours, we close them.
You should not set any huge goals for this pair, since the volatility is not too high, and we may incur a loss. Traders who like some kind of dangerous strategy can be shorted at extreme levels. These include round levels, such as 60, 70, 80. As long as the correction does not stop, you should keep a position and thereby earn money, including on swaps. But again, I repeat once again, this currency pair is not for beginners. And even more so, this strategy requires good experience.
In general, pay attention to round levels, because they are not only for speculators, but also for ordinary people and the country's economy as a whole. On this currency pair, round levels play an even larger role than on the other pairs.
And in the end, I don’t see any good opportunities for scalping inside the day, but if someone succeeds, then, as they say, it’s good for health. In general, to climb inside the day and on small time frames, I would not advise. We have already discussed correlations with oil, but nevertheless, I think, it is worth repeating.
If you see a movement on oil, which is a leading indicator for the USDRUB pair, and the pair has not yet played this movement, then it's time to open positions.
This strategy is quite simple, but it’s worthwhile to set limits for yourself, namely, how many percent oil should move in order to serve as a trigger for entering a position on this instrument.
Another interesting strategy that can come in handy in your trading.
Let's look at the movement of this currency pair on Friday. If an hour before the market closes, the price is not adjusted against the background of the previous movement, but only grows and grows, this means that speculators are in no hurry to close their positions on the weekend.And this means that they are waiting for the growth of this currency pair on Monday.
But growth is usually short-term. Therefore, if the movement on Friday does not fade, and the positions are not fixed, then you can safely leave them on the weekend and on Monday, after waiting a couple of hours, close and take profit. Such a strategy is likely to work out once a week. Therefore, pay particular attention to the currency chart on Friday.
The economy of the Russian Federation is 7 in the world. However, it is highly dependent on energy exports, namely oil and gas. Therefore, the Russian ruble is very dependent on oil quotes, as well as on situations in foreign economic policy.
This pair is not for beginners. It contains a huge percentage of speculative transactions. GAPs for this currency pair do not close, swaps are not very large. You should not pay attention to this. Consider breakdown strategies for range breakdown. It is best to use them at market openings when strong movements are observed.
In the first two hours, fraudulent movements often occur. You can leave deals in the direction of the current trend at H1, and close during the morning movement. It is also worth considering long-term purchases with a period of several months. An important role is played by round psychological levels, namely 40.50.60, etc. They are more significant than on other currency pairs.
You can consider a strategy in which you want to short at these round levels, as well as earn on swaps, until the correction ends. But this strategy is not for beginners and will require good experience from you.
I would not recommend scalping intraday on small timeframes. It is worth paying attention to the correlation with oil, namely its movement. If any movement has not yet been displayed on the ruble, then it's time to enter the position.
Movements at the end of the day on Friday often show what the trend will be in the first hours of Monday. If there is no fixation of positions and the trend that has been formed throughout the day continues, then it is quite possible that on Monday it will continue within a few hours after the market opens.
You should keep track of news that talks about oil prices and Russian foreign policy. All this can be read on any information site, since most of us live in Russia or speak Russian. Therefore, we have unlimited access to this information.
In conclusion, I repeat once again that this currency pair is not for beginners. You should constantly pay attention to the overestimated spread and commission for this currency pair during periods of economic instability.