Choosing the best currency pairs to trade in forex is not a cakewalk. There are several factors to consider and the main includes trading strategy, spread, volatility, and the degree of difficulty of predicting the course.
There is a wide range of currency pairs available in the forex trading market if you are a Forex broker. Mostly, overlooking other instruments, forex traders open positions on every known GBP/USD and EUR/USD, the currency pairs most traded in the world. There are still a lot of popular currencies apart for them.
What are the best currency pairs to trade in the forex market?
These are the major currency pairs or the top traded currency pairs which includes the USD and the currency of one of the most noteworthy and economically established countries, like EUR/USD, GBP/USD, USD/JPY, NZD/USD, AUD/USD, USD/CAD, USD/CHF. Collectively, they account for over 70% of the total revenue of the forex market. The eminent currency pairs are considered with the maximum liquidity of transactions, huge player numbers, and global popularity.
EUR/USD
EUR/USD is the most traded currency pair, which accounts to more than 1/3 of the total number of transactions in the forex market. Trading EUR/USD gives the trader a wide range of benefits like the instrument’s high liquidity, which defines the favorable circumstances of assumption of transactions. And, because of the liquidity, EUR/USD is one of the Forex’s most foreseeable currency pairs. With the use of technical analysis indicators, its price dynamics can be forecasted.
Euro/US dollar figures are complex to fundamental factors. Specifically, this currency pair depends on the fiscal policy of the European Central Bank and the US Federal reserve, along with the variance in key interest rates by the ECB and FRS.
USD/JPY
The pair of Japanese yen and US dollar which is the top currency of Asian trading sessions, turns as a valuable competitor to the aforementioned pair. USD/JPY is the next level of liquidity tool in the forex, which accounts to about 17% of trades on the forex market.
Here are the benefits of trading USD/JPY pair:
· The terms and conditions are favorable.
· Through technical analysis, price dynamics are predictable.
· Sensitive to fundamental features. This currency pair’s price dynamic can be forecasted by focusing on the significant economic information.
· Volatility is high. This pair is in the top 3 of the most unpredictable instruments in the market of international currency.
· Trading in the morning is of high liquidity. It is the most liquid from 04:00 to 13:00 in the Asian trading session.
GBP/USD
The British pound/ US dollar pair is in the 3rd rank of a liquidity instrument which accounts for about 12% of the total trading amount in the forex market. This pair is considered by instability and high volatility of prices. Thus, it is known and the most tradable currency among professional traders who are focused in aggressive and short-term techniques. The pair prices are delicate to fundamental aspects and statistical information on the actions of the Bank of England and the state of the British economy, in addition to USA’s macroeconomic data.
GBP/USD pair is a suitable tool for professionals in the forex trading who opt for aggressive instant strategy.
USD/CAD and AUD/USD
These currency pairs are categorized with lesser liquidity. They are considered as commodity pairs for their values are closely connected with oil and gold. Canada is one of the largest producers of oil in the world, thus the USD/CAD price is highly dependent on the price of oil. Likewise, Australia is a large manufacturer of gold, consequently, the AUD/USD price is reliant on the prices of gold.
Newbies are not advised to trade several currencies simultaneously. It will give a much better result if they will specialize in one or two instruments.
Focus first on the simplest and relatively popular pair and it will bring profit to your account.