Best Currency Pairs to Trade in Forex A Quick Guide

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Subtle characters such as this can quickly see you taking on more risk and at points, unable to manage the trades. Justin Bennett is an internationally recognized Forex trader with 10+ years videforex of experience. He’s been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg.

But with that fast profit potential comes an increased risk if trades turn the other way. A fast reversal rather than a price swing in your favor can quickly pile up losses for your trading account. His trading strategies which are based on non-linear dynamic models have achieved more than pips of profits since 2015. And right now there are some very strong buy and sell signals across several markets you don’t want to miss. The USDCAD transactions make up approximately 4% of the daily Forex trades.

If you are looking for the best currency pairs to trade as a beginner, you’d want to steer clear of exotic pairs as they come with low liquidity, high volatility, high spread, and risks. A currency pair is a quotation that includes rest api handbook two distinct currencies , with the value of one currency valued against the other. Trading in the Forex market is quite challenging, as proven by the fact that most beginners lose significant amounts or all of their investments.

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Traders’ minimal overnight market activity reduces spread expansion, saving on deposits. If you see this pattern, from a technical analysis standpoint, this is actually bullish. This means that for AUD/CAD, this simple strategy tends to lose money over time. If you apply those strategies to a mean reverting market, you’ll suffer losses consistently over time. It’s not going to make an impact on the liquidity of the Forex markets.

Like the other currency pairs, traders should keep their eyes on any ECB and BoE announcements which would increase volatility further. The major pairs in the Forex market are the four most heavily traded currency pairs in the forex best day trading strategies that work market. The four major pairs at the moment are EUR/USD, USD/JPY, GBP/USD, and USD/CHF. Now that you have the breaking news on hand, you can turn to our blog for the longer term, solid trading strategies on select currency pairs.

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If you are a morning person, we suggest you try US and European markets, and for the night owls, we recommend Asian markets. Essentially, opportunities lie in a significant price movement caused by reports, breaking news or a major trend getting stronger or overturned. In Major pairs, EUR/USD, USD/CHF, GBP/USD, and USD/JPY are the most profitable. Use more than one technical indicator to confirm the price analysis and only make decisions after the trend is confirmed. Get to know us, check out our reviews and trade with Australia’s most loved broker. For the most part, the USDJPY follows the global trends and especially that of the U.S. equity markets.

What is the best time to trade currency pair?

Key Takeaways. The forex market runs on the normal business hours of four different parts of the world and their respective time zones. The U.S./London markets overlap (8 a.m. to noon EST) has the heaviest volume of trading and is best for trading opportunities.

Almost every day, these countries publish their economic indicators which impact EUR/USD, some more, some less. This means there is no one central exchange, like in stock trading, that you must run all the trades through. For retail traders, this is your broker – when you buy a currency, the broker sells it to you.


You can create a watchlist by selecting the pairs you love trading and putting them in a special category and you can do this on forex brokers like Oanda. Many new traders find it difficult to focus because they keep trying to trade a lot of assets at the same time. This is usually a consequence of greed and the desire to profit from all price swings in the currency market. Expert traders know this information, but for beginners, we recommend not to trade many currency pairs at the same time.

You can also convert them for international investment and trade. Because the exotic currency pairs lack sufficient liquidity, at least compared to that of other pairs, the accuracy of technical analysis can suffer. So even if you find a pair that has a favorable spread, the lower volume may adversely affect your trading performance. If you’re not sure which pair to trade, then you can begin by putting all your favorite ones into a watchlist. Creating this watchlist helps you focus on the specific pairs you’ve spent time studying, giving you a better chance of choosing the right one out of the selected few.

Traders often call USDCAD the ‘loonie’ on account of the loon bird that appears on Canadian dollar coins. Therefore, AUDUSD falls into the commodity currencies category too. The Fed, BOE, and ECB, the Bank of Japan set the interest rates for the Japanese economy are the main fundamental market drivers. The currency with a higher interest rate often creates a higher demand. But nowadays almost all of the central banks are rallying towards negative interest rates.

Much in the same way as the Fed and ECB, the Bank of Japan sets the interest rates for the Japanese economy which, in turn, affects the value of the yen relative to the US dollar. The Swiss franc is the safe haven of foreign currencies, and USD/CHF is the abbreviation for the currency pair of the United States and Switzerland. CEO Valutrades Limited, Graeme Watkins is an FX and CFD market veteran with more than 10 years experience. Key roles include management, senior systems and controls, sales, project management and operations. Graeme has help significant roles for both brokerages and technology platforms.

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There may occasionally be other times that produce good-sized moves for weeks or months at a time. Regularly check volatility statistics on Mataf to see what times of day are most active. Since the USD/JPY is actively traded around the clock, there may be some other times you can take advantage of.

best currency pairs to trade in forex

Understand the economy’s political stability, economic condition and financial soundness before investing in its currencies. Monitor the currency pair and the overall forex market after you have made your first trade. Look for market trends as they will help in providing you with ideal price levels to enter or exit the market. For someone who is trading forex for the first time, the markets will no doubt be intimidating.

Nothing said on by Kiana Danial or other contributors is meant to be a recommendation to buy or sell any financial instrument. Rollover ratesWhen you hold a currency spot position overnight, the interest you either earn or pay is the rollover amount. Each currency has a different overnight interbank interest rate, and because you trade Forex in pairs, you also deal with two different interest rates. What is Leverage in ForexLeverage allows traders to hold large positions in the Forex market with fewer capital. With leverage trading, traders can borrow money from a broker and hold larger positions, which in turn could magnify returns or losses.

The most-traded currencies

This is perhaps the number one reason I avoid most exotic currency pairs like the plague. Sure, I understood the very basics of currency pairs before I opened a live trading account, but I certainly didn’t know as much as I should have. Reviewing news and economic data also helps to prepare you for the trading day because news releases can lead to price spikes and market gaps. Being aware of upcoming news keeps you ahead because you’ll have enough time to plan your trades accordingly. The Australian dollar is seen by many traders as a risk asset.

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Many beginner traders make a rookie mistake and switch between too many currency pairs. As a rule of thumb, anything over ten pairs is too many for a beginner trader or anyone still struggling. You may be able to stretch that to 12 or even 15, but anything above ten can quickly get out of hand. In case you are wondering is Forex trading profitable, the short answer is yes. But many opt for Forex traders to make fast profits since Forex markets are operational 24 hours for five days a week. Top Swing Trading IndicatorsSwing trading is all about profiting from market swings.