Profitable Pairs: A Guide To Choosing the Best Forex Currency Pairs Online Trading

Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and may not be suitable for everyone. We advise you to carefully consider whether trading is appropriate for you in light of your personal circumstances. We recommend that you seek independent financial advice and ensure you fully understand the risks involved before trading. Forex traders used to make educated guesses about how a currency value will change by observing historical fluctuation patterns. Nearly all charts have personalized setting options to allow you to view a variety of technical indicators like price and volume in order to analyze price movements for a currency pair.

  1. This is not to say you should never trade the USDCHF, but just be advised that in my experience the EURUSD and GBPUSD provide better price action trading opportunities.
  2. The EURUSD currency pair has the European Euro as its base currency and the United States dollar as the currency.
  3. However, keep in mind that low liquidity tends to increase buy-sell spreads.
  4. Moreover, their trading volume correlates with the size of the economy in corresponding countries.
  5. Many forex traders are known to use support and resistance level trading in order to better understand the market with this currency pair.

Those looking to employ longer-term strategies may also consider an early entry by trading at night. To choose a Forex currency pair, match it with your trading style and risk tolerance. Beginners favor major pairs like EUR/USD, while experienced traders may explore minor or exotic pairs.

What are the best currency pairs to trade at night?

The yen is Asia’s most actively traded currency, while the US dollar is the world’s most widely traded currency. Overall, the GBP/JPY’s liquidity and price swings attract experienced traders seeking both short-term day trading or scalping opportunities and long-term carry trade strategies. The EUR/GBP currency pair allows traders to profit from the economic developments within the European landscape.

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The pair can develop strong trends allowing traders to gain many pips on a single position. A short period of overlap between the Asian and the European sessions can be great for trading this instrument. It is positively correlated with USD/CAD and USD/CHF since the US dollar is the base currency there. USD/JPY can be successfully traded during the Asian and North American trading sessions, especially during important economic events either in Japan or the United States. Moreover, their trading volume correlates with the size of the economy in corresponding countries.

Understanding the fundamentals that drive currency pair pricing is essential to your success. The EURUSD is the most widely traded currency pair on the forex market. It pairs the currencies of the world’s two biggest economic areas in terms of Gross Domestic Product (GDP).

The pair is the most traded globally as it represents two giant economies (the US being the biggest in the world). The movement of the pair is impacted by factors that impact the valuation of each currency. If you are looking to trade the EURUSD, make sure to learn the technical intricacies of how it moves and keep up to date with the latest news impacting both economies. Major currency pairs are the most commonly traded currency pairs and include the US dollar, Euro, Japanese yen, British pound, Canadian dollar, and Australian dollar. These currency pairs typically have high liquidity, tight spreads, and average volatility. The top 10 most popular currency pairs include the Major ones and several Cross currency pairs.

What’s interesting about the chart?

In contrast, political instability, as seen with the Venezuelan bolivar (VES), can lead to currency depreciation and impact pairs negatively. Although you are trading on lower timeframes, such as the five-minute chart, it pays custom machine learning solutions to check the daily chart to assess the overall trend. It is easier to read these five Forex currencies because they’re either ranging or trending. When a trend begins, the price action tends to move for a significant period.

High volatility pairs are also prone to slippage at a greater rate. As the world’s most dominant reserve currency and as the currency of the world’s largest economy, the United States Dollar (USD) is the most widely traded currency in the world. The European Union Euro (EUR) is second in dominance and therefore makes this pair the most formidable in terms of liquidity and taking up the largest chunk of the market’s action. This pair tends to negatively correlate with the USD/CHF and positively correlate with the GBP/USD.

Which currency pair is most profitable in forex?

On the opposite end of the spectrum, the CHF will often lose value when other currencies are appreciating. During the Great Recession, CHF appreciated against all other currencies except the JPY. If you want to exchange USD for CAD, carefully monitor the price of oil to determine the ideal time to buy. Wars, trade disputes, political disruption, civil disobedience, elections,  and policy changes can all cause turbulence in the forex market.

This is due to the positive correlation between the British pound sterling, the Swiss franc, and the euro. For example, if a quote says EURUSD 1.18, it means that one Euro is worth $1.18 USD. In this example, the base currency is Euro and the counter currency which is measured against it is the USD. There is no industry standard when it comes to minimum deposit size. Most reputable brokers leave it up to the trader to decide how comfortable they are taking on a certain amount of risk. Because Australia and New Zealand are geographically reliant on China for trade, the AUDNZD pair is heavily impacted by the Asian trading session as well as local variables in Australia and New Zealand.

This could be a reason for the increased activity that USD/KRW has experienced, as traders and speculators seek exposure to another key Asian market, besides those of Japan, China and Hong Kong. The yuan has largely been decreasing relative to the US dollar since the start of the US-China trade war. Much in the same way as the Fed and ECB, the Bank of Japan (BoJ) sets the interest rates for the Japanese economy which, in turn, affects the value of the yen relative to the US dollar.

USD/CHF – (US Dollar/Swiss Franc)

Gold and silver are actual commodities, so they can also be considered “commodity currencies”, and once again they are traded in U.S. dollars, as we noted above. As with all currencies, these central banks (Federal Reserve and Reserve Bank of New Zealand) shouldn’t be underestimated. Changes to monetary policy from either of them can lead to NZD/USD volatility. Both are highly correlated because the United Kingdom’s economy is tied to the European Union. That’s because Australia remains one of the most dominant exporters of coal and iron ore in the world. A slump in commodity prices would impact the economy and decrease the value of the Australian dollar.

Pairs like EUR/USD are less volatile than pairs like USD/ZAR (South African rand). The forex majors are the finest forex pairs for scalping as they are the most widely traded and have the biggest trading volumes. A currency pair’s spread is another factor when considering it for scalping. When you initially begin swing trading forex, it is critical to keep an eye on several currency pairs in order to find the clearest opportunities.