- 6.1 Which Currency Pair is Most Profitable in Forex?
- 6.2 What is the Safest Currency Pair to Trade?
- 6.3 Which Currency Pairs Move the Most?
- 6.4 What is the Best Time to Trade Forex?
- 6.5 Which Forex Should I Buy Today?
Forex trading has been the talk of the decade. It is a great marketplace to get in. But as a beginner, things can be quite confusing initially.
One of the topics of concern is what the best forex pairs to trade are? If you want to succeed and make a profit, you must know the best forex pairs to trade. This article will work as a complete guide for that.
And the best thing is that you can take it as an FX trading master. So, let’s look at the top forex pairs to trade as a beginner without further delay.
What Is Meant by Forex Currency Trading?
Forex currency trading is a simple concept that you may already understand from the name. You might also know it as foreign exchange trading. The basic idea of forex currency trading is to buy and sell currencies in pairs.
But the activity itself is not as easy as it sounds. A lot of work will need to be put in to understand the best currencies to trade. You will also need to understand the relationship between the top currency pairs.
What exactly is this currency pair? As the term suggests, a currency pair is the accumulation of two currency abbreviations. The “Base” currency is the first listed currency. And the second listed currency is the “Quote” currency.
For example, a currency pair can be quoted as EURUSD 1.23. It means that one Euro is equal to USD 1.23. Here, Euro is the “Base” currency, and the USD is the “Quote” currency.
4 Types of Currency Pairs
You will find different types of Forex currency pairs in the Forex market. To be definitive, there are 4 different currency pairs in Forex. Here is a brief discussion on them.
The most common form of currency pairs in Forex is Majors. This category includes the top currencies of the world. So, there will definitely be USD.
Major currency pairs are usually highly liquid. As a result, you get flexibility in the market as a trader. But these currencies are competitive to trade as well.
Minor currencies don’t include USD from pairs. But these pairs include other influential currencies like Euro. Unlike Majors, these pairs have lower liquidity.
Minor currency pairs have very little information available for the traders. This makes trading these currencies less competitive. Thus, you may be able to leverage them as a beginner.
Crosses don’t involve USD either. So, any currency pair that doesn’t have USD includes in the Cross category. But what makes it different than Minors?
Cross-currency pairs may not include any major currencies of the world. But Minors will always contain any major currency other than USD.
Exotic currency pairs are also liquid. But they are quite volatile. And they also don’t have much volume.
Exotic currencies have very little depth in the market. This makes these currencies a costly option for traders. Some examples of them can include GBP/ZAR, AUD/MXN, and others.
3 Factors to Consider When Choosing a Currency Pair
Since you are thinking about it, you would want to make the best forex investment. Before you know the best forex pairs to trade, you need to consider some factors. They will help you to make more profitable investments.
Here are 3 factors you should consider when choosing a currency pair.
Currency Pair Information
As a beginner, you would need the information to trade currency pairs. This makes the Major currency pairs more advantageous to others. The data will allow you to forecast possible opportunities. And you can make investments accordingly.
On the other hand, smaller currencies have minimal data available. As a result, you will not be able to forecast the correct output. This makes them a risky currency pair to trade.
Liquidity of the Currencies
Liquidity is one of the most important factors to consider. You would want to trade currencies with high liquidity. This will enable you to make quick buys and sales.
But if you follow the Scalping strategy, liquidity may not be that important for you. The Scalping method allows you to make small profits throughout the day. Thus, you can profit from volatile currency pairs.
The Economic Conditions
The market value of any currency depends on the economic condition of the country. This makes it an important factor to consider. You would want to choose a currency pair whose economic considerations are stable.
8 Best Forex Pairs to Trade for Beginners
Now comes the most exciting part of the article. We will look at some of the best forex currencies to trade. To be exact, here are the 8 best pairs to trade forex.
The full form of USD is United States Dollar. We all know this, right! USD is also the most frequent forex trading currency. It is the currency of the most powerful economy in the world.
The second in line is EUR or European Union Euro. It is the second most powerful currency in the world. Thus, the two currencies together make the most liquid, informative, and profitable trading pair.
We all know what USD is. But GBP is Great Britain Pounds, and the GBP/USD pair is the second on our list. The currency pair is affected by the American and British economies.
This currency pair is also known as the “Cable.” The currency pair is positively correlated with EUR/USD. This means that the two currency pairs move in the same direction.
JPY or the Japanese Yen to USD is another common currency pair. JPY/USD is the best forex pair to trade during the Asian session, and it’s a sensitive pair as it reflects the political and economic tension between the countries.
The pair has another name. The name is “Gopher.”
AUD/USD is another significant currency pair. Quite a few things influence the value of this pair. For example, Australian gold, iron, coal, and Reserve Bank influence the value. And the US Federal Reserve controls the USD value.
Another name of this currency pair is the “Aussie.”
CAD is the Canadian Dollar, and this trading pair is quite popular. We can also call them “Loonie.” The only concern is that this currency pair is negatively correlated with most other currency pairs.
USD and Swiss Franc are the next pair on the list. The name of the currency pair is “Swissie.” As a beginner, you would feel very safe with the Swiss currency.
This is the first Minor pair on our list. This pair consists of Euro and British Pound. If you are considering investing in this pair, you are likely to face some challenges.
You might find it hard to forecast this currency pair. This is because of the geographical and current political situation between the two regions, making the pair an extremely volatile one.
Another Minor pair in our list is the New Zealand Dollar and the Swiss Franc. As a trader, you will need to focus more on the agricultural prices of New Zealand. The pair may not be that popular, but it’s a good start for forex trading.
The Best Time for Forex Trading
Understanding the Forex trading sessions is also essential. The Forex market is open 24 hours every day except the weekends. So, what are the best times to trade forex pairs?
The trading hours are connected with the market opening hours. So, you will have to keep an eye on the participating countries of the currency pairs. If you want to invest in forex pairs with the highest daily range, here is the best timing:
- New York- 13:00 to 22:00 GMT
- London- 08:00 to 17:00 GMT
- Sydney- 22:00 to 07:00 GMT
- Tokyo- 00:00 to 09:00 GMT
Frequently Asked Questions
Which Currency Pair is Most Profitable in Forex?
The currency pairs that involve USD can be most profitable for you. This makes the Major currency pairs the most profitable ones.
What is the Safest Currency Pair to Trade?
The “Swissie” is the safest currency pair to trade. This pair involves the USD and CHF (Swiss Franc).
Which Currency Pairs Move the Most?
Almost all Minor currency pairs are volatile. This means that they move the most. Along with them, the AUD/USD is also quite volatile.
What is the Best Time to Trade Forex?
The US and British market timings are the best times to trade Forex. We have mentioned the complete list of essential timings for Forex trading in the article.
Which Forex Should I Buy Today?
The best Forex to buy today is the USD/EUR currency pair. Apart from this, any Major currency pair can be a profitable choice for Forex trading.
So, now you know the best Forex pairs to trade for beginners. Our suggestion is to pick one that you know the most about. You will also need to keep track of the currency economies.
Forex trading is a dynamic investment. Countries are getting into political and economic troubles with each other. Thus, you must do your research before investing.