2 7 Criteria for Choosing Currency Pairs in Forex 1. Consider Liquidity 2. Consider Spread 3. Consider Volatility 4. Consider Trendiness 5. Consider Trade Cost 6. Step one: find all major currency pairs Step two: choose a currency pair that is traded when you are available Step three: choose a currency pair with moderate volatility Step four: choose 21/7/ · Choosing a currency pair for trading strongly depends on your expertise as a forex trader. If it’s just the beginning of your journey, then it’s better to focus on majors since they’re 12/3/ · EURUSD – One of the Most Important Forex Major Pairs. A major pair because of the USD presence, the EURUSD is the most popular Forex currencies part of the Forex The first currency in the pair's designation is called the base currency, the second is the quote currency. The base currency is the currency whose unit price is always measured in units of ... read more
So you need one best pair to trade. Second, look at their trends, which pair is trending and which one is on support or resistance level. All in all, the best pair among should be trending because you want to trade a pair that moves. Compare the pairs with other pairs that share one of the currencies to get more confirmation. Preferably a cross currency pair.
Like we earlier said, we need a currency pair that has the weakest and strongest currencies in a pair. You need to reconsider. Since the US. Dollar is very strong, having a weak GBP pound will make the pair fall tremendously and hold for long. The forex market is open 24hrs a day and operates for five days in a week. You can choose to trade at night or day or both. However, you must know forex market trading sessions, which pairs to trade and in which session. The Forex Market opens with Sydney at AM EST , Tokyo session , London session and ends with New York session at PM EST.
It is most active in sessions of overlap. If you trade between AM — AM EST , Tokyo Session, the Yen currency pairs are the best to consider. Volatility in the market is also one of the factors you should look at when choosing the best currency pair to trade in forex.
With high volatilty, you spend less time on a running trade and earn more in a shortest time possible. As a matter of fact, high volatile currency pairs have high pip value and low volatile pairs have less pip value. This is because pip value increases with increase in volatility.
However, you should keep this in mind, if you choose to trade high volatile currency pairs. It requires to use large stops or else you will suffer premature nock-outs. High volatility is more likely to happen during release of very important economic news.
For example, Interest rate, NFP and un employment rate. Comparing different currency pair movement can guide you to know which pair is good to trade. Last but not least, use trend following indicators.
Moving Average indicator or Bollinger bands. A moving Average is a trend following indicator. With a Moving Average on your chart, you can easily tell whether the market is trending or ranging.
On top of that, it also shows you the direction of the currency pair. So you know which currency is weak or strong. Alternatively, if you choose to use a bollinger band on your chart, this time you will have three lines following price on your chart. Bollinger bands are meant to measure price volatility.
When the bands expand, there is an increase in volatility. When the bands contract, there is a fall in volatility. However, since they also follow prices, just a simple glance you can tell whether price is trending or ranging.
This simply means, you can compare different currency pairs that have your trading set up, just looking at these indicators to choose the best to trade. The Forex market has many currency pairs to trade but this does not mean they are all good to trade. When you choose the best currency pair to trade in forex, you increase your chances of success of your set up.
This also increases your profits. Your best currency pair to trade must have a weak currency and a strong currency. Now that you know how to determine the strength of a currency pair, you will be able to know what is best to trade.
The best currency pair to trade should have less spread, high volatility and stable movement. If you consider the factors we discussed above, you will see a tremendous change in your trading. Lastly, with your good strategy you can profit consistently only if you choose to trade with discipline. Plan what you and trade what you plan. Good luck in your trading. Your email address will not be published. Free Forex Coach Follow. STRATEGY TO TRY OUT👌📌 Share on Facebook Share on Twitter Share on Linked In Share by Email.
HOW To CHOOSE THE BEST CURRENCY PAIR TO TRADE IN FOREX Posted by Leopo Feb 9, Technical analysis 0. What is a Currency pair? dollar — is the quote Currency You determine the value with the exchange rate. In this case, 1. To mention but a few; 1. Type of Currency Pair; Preferably, major pairs are the best to trade compared to minors and exotic. Apart from the major currency pairs, the minors are also best currency pairs to trade in forex. Strength of a pair; Knowing the strength of a currency pair also matters a lot when trading.
So, How do you Pick the Best Currency Pair to Trade looking at the strength of the currency pair? First you need to look at their movements, compare the volumes in the market. Third which pair is likely to be traded by other traders. And of course the pip value and spreads. Spread is the cost you pay to your broker for trading that currency pair. So, you want to pay as low as possible.
The next step you can do to filter currency pairs with lowest spread are the ones that are the most liquid. And that means that they are traded very often.
Have in mind that the broker will give you low spread on the currency pair if you trade it often. Because if you trade often that means they will make money often so they can lower the spread for you and to bring more customers. When they have more customers and when you have low cost for trading that means you and all other customers will trade more. And at the end that means they will make more money. You can see it in the image below.
And that is only for the pairs from the list we have filtered. You have come to an end, but if you want to choose a currency pair that respects support and resistance and trend line then read further. First currency pair is EURUSD with drawn support and resistance lines on the chart.
What you can see is that the pair is respecting the support and resistance lines. It changes direction when it comes close to the support and resistance. The area close to support and resistance which is marked with an orange rectangle around support and resistance lines is called supply and demand zone.
As you can see this pair is respecting the support and resistance lines. If the support and resistance lines are drawn correctly then it is visible it respects them. So, this pair is also good to trade by analyzing it with support and resistance. That means you can make the analysis and predict future price movement. When you put the supply and demand zone you will have a better overview where the price tends to change direction.
You can make the conclusion that all three pairs respect support and resistance lines which makes them good for trading. That means also that many traders are using support and resistance lines to analyze the pair and trade the pair. Lets see how they respect trend lines which adds more arsenal to the trading analysis of the pairs. Trend lines with support and resistance are good tools to analyse where the price will move in the future.
Trend lines are dynamic support and resistance lines where the price will bounce from them or break them. Drawing trend lines on the chart is not so hard after you practice.
But in time you learn what works and what not. Because the price tends to stay inside trend lines you can easily see where the price is heading. And when you have support and resistance with trend lines combined you can easily see when the price will have a hard time to pass support or resistance lines. When the price forms a trend line it does not follow the trend for too long.
It would be good that the price respects the trend line many times which would give significance to the trend lines. As you can see the trend lines do not get touched several times which makes them unstable and less precise tool to trade with support and resistance. You can see that it follows the trend lines, but it also does not respect them that often.
When the price comes to the horizontal support and resistance lines the price respects them, and combined with trend lines sometimes you have a confluence of support or resistance which makes the pressure on the price. Supply and demand zones are giving you more confirmation to the analysis which you can use to your advantage.
Now, at the end you can make a conclusion that in six steps you have chosen a currency pair for trading. With this way of filtering you can find more pairs for trading, but have at least first, third, five and six steps included. If you are trading crypto or stock market you can use the same steps to filter the best pairs for trading. A Forex trader since I like to share my knowledge and I like to analyze the markets. My goal is to have a website which will be the first choice for traders and beginners.
Market analysis is featured by Forex Factory next to large publications like DailyFX, Bloomberg GetKnowTrading is becoming recognized among traders as a website with simple and effective market analysis. Forex Major, Minor, Cross Currency Pair. How to Choose a Currency Pair in Forex. What are Forex Currency Exchange Rates. What is Forex Currency Exchange. What is GJ in Forex — GJ Meaning. What is CFD in Forex — CFD Meaning. What is XAU in Forex — XAU Meaning.
What is GU in Forex — GU Meaning. How to Choose a Currency Pair in Forex by Frano Grgić Oct 20, Forex Currency Pairs. Home » Forex Currency Pairs » How to Choose a Currency Pair in Forex. Choose a Forex currency pair by following these steps: Step one: find all major currency pairs Step two: choose a currency pair that is traded when you are available Step three: choose a currency pair with moderate volatility Step four: choose low cost currency pair Step five: check does the pair respects support and resistance level Step six: check does the pair respects trend lines These are necessary steps to do in order to choose a currency pair for trading.
Step one: Choose a Major Currency Pair I will not get too much into details about major currency pairs, but just as a reminder you need to know that a major currency pair is the pair with USD included. Step two: Time of Activity for a Chosen Currency Pair If you live in Europe then you can trade EUR and USD during the day. By knowing which pair is active more you can also plan the day accordingly. Step three: Volatility of a Selected Currency Pair Up to now, you have a list of four currency pairs.
The Forex dashboard is formed by all the products offered by the broker and available to trade. One can find Forex currencies, but also indices, commodities, contracts for difference CFDs , bonds, etc. Each brokerage house has its own offering, this being one of the things that differentiate the numerous brokers in competition to attract as many retail traders as possible.
A Forex broker, obviously, focuses on Forex currencies, in the sense that these are the primordial markets in its offering. Typically, each country has its own currency some countries form a union and may share a currency — e. Any currency pair that has the U. dollar in its componence is called a major pair. The rest are crosses.
Therefore, all the currency pairs present in the Forex dashboard are either majors or crosses. Many traders consider that by comparing the economic performance of a country e. imports, trade balance with another country under the same metric, the opportunity to speculate arises. For instance, consider the EURUSD pair. For each currency pair, Forex brokers offer two prices available for traders — the bid and ask price. From the bid price, one may only sell, whereas, from the ask price, one can only buy.
Imagine you believe the Japanese Yen JPY will strengthen against the U. Dollar USD. This translates into a potential USDJPY pair move lower. If the pair did move in your favor and you want to book the profit, when closing the short trade, the trading platform squares the original position by using the ask price.
The difference between the prices is called a spread. They differ from currency pairs to currency pairs, from majors to crosses, and from a trading session to another. Not all currency pairs move in a similar fashion. Some spend most of the time in tight ranges, and some other ones often move in strong trends. Depending on the trading style, traders must choose what currency pair suits the most. For example, a cross pair that tends to spend a lot of time in ranges will suit a trading strategy based on buying oversold and selling overbought levels using an oscillator.
Or, a trading system based on moving averages or a different trend indicator will benefit the most from a currency pair that often move in strong trends.
The Forex market only stops over the weekend. And then the cycle starts again. In each session Asian, European, American , trading conditions have certain particularities.
It depends on many factors — the trading strategy, the trading style swing trading, scalping, investing , the time horizon for a trade, and so on. Forex currency pairs are unique markets. Each pair represents a market on its own, with particularities that may or may not appear in some other markets.
A major pair because of the USD presence, the EURUSD is the most popular Forex currencies part of the Forex dashboard. Because it has the tightest spread when compared with all other currency pairs, many traders favor it due to its low impact on the trading costs.
The pair also has a decent average range, it trends a lot and is liquid enough to buy or sell any volume, regardless of how big it is. Because the interest rate on the JPY is one of the lowest in the world, investors wishing to buy equities borrow in JPY and then purchase USD to pay for the stocks. The move translates in a bullish USDJPY move, similarly to the one made by the U. Naturally, the process reverses when a risk-off move begins, with investors selling stocks to cover the JPY loans.
While having a wider spread than the EURUSD and USDJPY, it compensates with the distance traveled and liquidity. Literally, it is suitable for any type of strategy. The Swiss Franc CHF is viewed by market participants as a safe-haven currency. It means that during risk-off events, investors find refuge in the CHF, sending the USDCHF pair lower. The Swiss National Bank SNB is a central bank like no other, making no secret the fact that it often intervenes to stop the CHF appreciation.
Moreover, the SNB is a private entity, having shares listed on the Swiss stock exchange. The Australian Dollar AUD is strongly correlated with the price of commodities such as gold, copper, etc.
Because Australia is a big exporter of such commodities, its value rises and falls when gold, for instance, changes its value. The AUDUSD pair, also called the Aussie pair, depends on the health of the Chinese economy. Australia is an exporter to China, and the Chinese business cycle strongly influences the way the AUDUSD moves.
Because the two countries i. Also, because Canada is a big oil producer, the value of its currency, the Canadian Dollar CAD , is influenced by the oil price fluctuations. The USDCAD is less liquid, especially during the Asian session, having wider spreads when compared with other currency pairs.
It is a special currency pair due to the low margin needed to trade it. To make the most of the currency market and the way currency pairs move, please visit FXOpen and check the trading conditions offered. FXOpen is a global forex and CFD broker, with a network of worldwide brokerages regulated by the FCA, CySEC and ASIC.
FXOpen offers ECN, STP, Micro and Crypto trading accounts dependent on entity. How to Choose a Currency Pair for Forex Trading. What Are Currency Pairs? How to Pick Forex Currencies to Trade Many traders consider that by comparing the economic performance of a country e.
Spreads on Different Forex Currency Pairs For each currency pair, Forex brokers offer two prices available for traders — the bid and ask price.
Trendiness Not all currency pairs move in a similar fashion. Trading Sessions The Forex market only stops over the weekend. What is the Best Currency to Trade in Forex? EURUSD — One of the Most Important Forex Major Pairs A major pair because of the USD presence, the EURUSD is the most popular Forex currencies part of the Forex dashboard.
USDCHF The Swiss Franc CHF is viewed by market participants as a safe-haven currency. AUDUSD The Australian Dollar AUD is strongly correlated with the price of commodities such as gold, copper, etc.
USDCAD Because the two countries i. Conclusion To make the most of the currency market and the way currency pairs move, please visit FXOpen and check the trading conditions offered. FXOpen FXOpen is a global forex and CFD broker, with a network of worldwide brokerages regulated by the FCA, CySEC and ASIC. Share news. Load Comments. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. FXOpen UK: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
4/2/ · In order to choose the best currency pair for your trading goals, you need to begin understanding its volatility and liquidity. Then you will need to match them with the length of The first currency in the pair's designation is called the base currency, the second is the quote currency. The base currency is the currency whose unit price is always measured in units of Step one: find all major currency pairs Step two: choose a currency pair that is traded when you are available Step three: choose a currency pair with moderate volatility Step four: choose 2 7 Criteria for Choosing Currency Pairs in Forex 1. Consider Liquidity 2. Consider Spread 3. Consider Volatility 4. Consider Trendiness 5. Consider Trade Cost 6. 12/3/ · EURUSD – One of the Most Important Forex Major Pairs. A major pair because of the USD presence, the EURUSD is the most popular Forex currencies part of the Forex 21/7/ · Choosing a currency pair for trading strongly depends on your expertise as a forex trader. If it’s just the beginning of your journey, then it’s better to focus on majors since they’re ... read more
A currency that goes first in the pair is defined as a base currency, whereas a currency that takes the second position in the pair is specified as a quoted currency e. Major currencies majors are the ones that are traded with the highest volume. That means you are available when the London and New York trading session is active. Typically, each country has its own currency some countries form a union and may share a currency — e. So those are some of the things that you should think about when you are selecting a currency pair to trade. dollar — is the quote Currency You determine the value with the exchange rate.There are several strategies you could use when trading on currency pairs, depending on the length of the trade, the specific pair and the size of your position. It will be interesting to see how China shapes its strategy to combat COVID As a result, prices are usually not publicly disclosed. We explain why Mark Zuckerberg needs the metaverse. Personal Institutional Group Pro.