Ways To Play The Swiss Franc

Most forex traders have a fair amount of experience trading in currencies like the Euro, Dollar, and Japanese Yen.  But when we are really looking for the best ways to spot new opportunities as they arise it is important for traders to have an understanding of the peripheral currencies outside of this list.

One of the best examples here is the Swiss Franc, which often falls into the safe haven trading category.  Whenever trading in the Swiss Franc, it is important to have a Swiss forex broker that will give you access to the region’s most updated news.  This can give you an added advantage in finding new trading opportunities relative to the rest of the forex market.

Safe Haven Play: USD/CHF

When the markets are trading with a certain level of uncertainty, it typically becomes time to start looking at assets that are associated with a safe haven reputation.  It is true that the US Dollar is a strong representative of this category in its own right, but we have seen many historical examples of situations where the USD/CHF has dropped to show bearish activity when market volatility has risen to a certain extent.  

This means that the CHF can be viewed as one of the strongest safe haven assets that is available in the market.  It could even be argued that it is one of the strongest amongst all asset classes — not just in the forex space.

Carry Trade:  CHF/JPY

On the other hand, traders can look for situations where markets are relatively calm as this tends to be one of the best scenarios for those looking to enter into carry trade forex positions.  In most cases, the Japanese Yen is used as a funding currency for these types of positions, and many of the best trades occur on the longer term time frames.  This is because carry value accumulates over the life of the position so if we are able to successfully pair the CHF with the JPY, there is an excellent potential to profit.

These are all factors that should be considered when forex traders are looking for various ways of forex trading using positions in the Swiss Franc.  Some excellent trades have been placed using this currency and this makes its one of the strongest assets in the market.  

About the Author
Richard Cox is a university teacher in international trade and finance. Lessons in macroeconomics and price behavior in equity markets. Trade ideas are generally suggestive of time horizons of one to six months.

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