As a beginner, many people worry about the risk of forex market. There are thousands of forex currencies to choose from, but what constitutes the greatest currency combination to trade?
Forex is the world’s most changing financial market, with over $6.6 trillion traded every day. Forex traders, whether seasoned or new to the market, have lots of opportunities to earn.
The majority of novice traders want to discover which currency pair in Forex is the most profitable and which Forex pairings are the best to trade. There isn’t a clear answer to which currency pairings are the best to trade right now. The outcome of a Forex deal is determined by a number of variables.
For most Forex traders, trading the main currencies is the favored alternative. Because the major Forex currencies are all coupled with the US dollar, there is a lot of liquidity and volume, and the price tends to move. On the charts, a trending market is easy to read and identify bullish or bearish movements.
1. What Characterizes a Good Forex Currency Pair for Trading?
Liquidity and volume are required to trade forex successfully since price movement is created by them. The price swings between currency pairs are how a forex trader gets the money.
Trading Forex is difficult, and forex traders have a 95 percent failure rate. Yes, that is a dreadful statistic, but it does not rule out the possibility of making a career from forex trading. To trade Forex successfully requires time to build trading abilities and mental fortitude.
Many new forex traders are on the lookout for the “magic” technical indicator or “safe” strategy. These items aren’t real. To become a great trader in forex, you must be committed and dedicated. When it comes to learning how to trade forex, novices often look for the easiest currency pairings to trade. What they truly want to know is how to avoid losing, which is impossible to do.
When trading forex, your goal is to make more money than you lose. That’s all there is to it. You may lose 70% of the time, but if your victories outnumber your losses, you can stay ahead and earn consistently from forex trading.
What determines how excellent a currency pair is to trade is your ability to analyze, wait, and time it. Any currency pair may be traded by a skilled forex trader with a high likelihood of winning.
It’s reasonable that as a newcomer to forex, you want things to be as simple as possible, therefore picking the correct currency pairings to trade will help you gain an advantage.
2. The 4 Best Currency Pairs to Trade in Forex
Because they are frequently trending pairs, these currency pairs are simpler to interpret than many other forex currency pairs.
When the price of a currency pair reverses and a new trend begins, there are several possibilities to discover high-probability forex bets.
- GBP/USD – (Pound sterling/ U.S. dollar)
- EUR/USD – (Euro/ U.S. dollar)
- USD/CAD – (U.S. dollar/Canadian dollar)
- USD/CHF – (U.S. dollar/Swiss Franc)
1. GBP/USD (pound sterling/US dollar)
For forex traders, GBP/USD (pound sterling/US dollar) is a key currency pair to trade. Because the volatility of GBP/USD is higher than that of EUR/USD, it is ideal for intermediate and experienced traders.
2. EUR/USD – (Euro/ U.S. dollar)
The EUR/USD (Euro/US dollar) currency combination is a good place to start for newcomers. Unlike several Forex currency pairings, the EUR/USD has some volatility, but not so much that newcomers to the market are caught off guard by big price swings.
The EUR/USD is an excellent candidate for technical analysis.
When the price of EUR/USD breaks and retests a historical price zone, it’s a strong indicator that the price of EUR/USD is moving.
3. USD/CAD – (U.S. dollar/Canadian dollar)
USD/CAD (US dollar/Canadian dollar) is a prominent currency pair that moves in the same direction as USD/CHF.
It’s critical to understand how oil prices impact the USD/CAD exchange rate. Check the oil charts for basic analysis to discover if oil prices are declining or growing.
4. USD/CHF(United States dollar/Swiss franc)
The USD/CHF (United States dollar/Swiss franc) is a prominent currency pair that is diametrically opposed to the EUR/USD. As a result, when USD/CHF rises, EUR/USD falls.
Wait for the price to break out of the range if you’re trading USD/CHF. The trendline below is a 200-pip decline, so if the price comes out of the box and retests, you may aim for that level as a goal. Although it made a little higher high, the price appears to be declining.
Trading the USD/CHF currency pair is appropriate for intermediate Forex traders and novices with some price action experience, similar to trading the GBP/USD currency pair.
Four of the main currencies listed are dollar-sensitive. Before trading these pairs, it’s critical to analyze US economic statistics and financial news. Oil prices have an impact on the USD/CAD, but interest rates, inflation rates, GDP, and unemployment data have an impact on all four currencies.
Also, keep in mind that the non-farm payroll in the United States is paid on the last Friday of each month. The data announcement has an impact on all dollar pairings.
EUR/USD is the ideal currency for Forex novices, whereas GBP/USD, USD/CHF, and USD/CAD are better currencies for experienced price action traders. Technical analysis and fundamental analysis are two different types of analysis.
3. The reasons for picking these 4 currency pairs
The USD is a prominent currency pair. For traders with varying degrees of Forex expertise, all four Forex pairs are the easiest to trade.
These Forex currency pairings are simple to understand and feature a large number of historical price zones where the price reacts. The four most popular Forex pairs have the highest liquidity and volume, resulting in the best opportunities to earn from Forex trading.
Be wary of linked pairings, particularly the US dollar pairs, when picking Forex currencies to trade. If you trade EUR/USD and USD/CHF, for example, you may be taking on twice the risk. If one pair’s price is against you, the other pair’s price is likewise against you.
Before trading Forex, especially with U.S. dollar pairings, always examine the latest economic news. The dollar is affected by both global and country-specific financial news.
On the first Friday of each month, avoid trading dollar pairings since the US non-farm payroll is released. The price of dollar pairs usually rises quickly after the release of new data.
If you’re new to Forex trading, start with the EUR/USD pair. Once you’ve mastered trading EUR/USD and achieved some success, go on to another currency pair, such as GBP/USD. Spend some time observing the price action to see if you can see any chart patterns or reversal zones.
Trading Forex for beginners is difficult, but it is beneficial if you remain committed to learning how to trade Forex and want to improve as a Forex trader every day.
Financial instrument trading or investment may not be suitable for all investors. It does include risk and the prospect of capital loss.
Pocket Forex offers a demo account and experience capital for beginners to try their safe forex trading because it’s a simulation. While in using the app, users can simulate many times until they feel comfortable entering the real forex market.