To select a good currency pair, it is very important that you analyze all the charts carefully and also check for all the market updates. According to the market situation and your portfolio requirements, choose currency pairs that suit you. Don’t follow the crowd and do try to pair strong currencies against the weak ones. Then run technical analysis on the currency pairs you have shortlisted to finally reach to a decision.
There are many types of currencies in Forex trading. The best of these currencies is the major currency. I have chosen to trade some currencies from this major currency. These are EURUSD, AUDUSD, USDJPY, EURJPY, and GBPUSD. The spread in these pairs is much less and the movement is much better. I make a lot of profit by trading in these pairs.
lavis_book posted: To select a good currency pair, it is very important that you analyze all the charts carefully and also check for all the market updates. According to the market situation and your portfolio requirements, choose currency pairs that suit you. Don’t follow the crowd and do try to pair strong currencies against the weak ones. Then run technical analysis on the currency pairs you have shortlisted to finally reach to a decision.
First, identify whether the pair is a trending or non-trending pair. Second, figure out what type of strategy you will be trading. Finally, you want to know the average true range of that pair (which means how much the pair moves on a day-to-day basis).
Test all currency pairs available with your broker on a demo account and you will know what’s good for you. There’s no need to ask anybody what to trade. Find it out on your own. Of course, it will take some time but in the end you will know for sure what’s really compatible with you.
“Best” is very subjective. All pairs work differently because they all trend differently. For instance, I can trade EUR/USD rather than USD/JPY. All pairs require different analyses. It is up to you which pair you can trade well. So if you are new, try to trade with 2-3 pairs and test yourself out. However, go for major pairs or pairs which have high liquidity. You can go with EUR/USD because it is easy to trade for beginners.
If you are planning to select a currency pair for trading in the forex market, I’d suggest you go for a liquid pair as they are combinations of two large economies and offer stability to a certain extent as well as are liquid and facilitate lower spreads in comparison to the illiquid pairs. Some of the heavily traded currency pairs are USD/EUR, JPY/USD, AUD/USD, GBP/USD etc.
All the currency pairs might be considered as the best ones. It doesn't matter which one you would choose, the matter here is that your strategy would work for this currency pair or maybe couple of such ones. I believe traders shouldn't concentrate their attention on such minor things. They mean nothing. To my mind, such a choice is inherent to stocks for example or maybe ETFs and something like that. In this case you can ask which stock or at least which industry is the best. Here the answer is simple, the bet industry for stock market is IT. Always remember about the diversification of your portfolio, it has to be variable.
Broadly, currency pairs are divided into 4 types - major, minor, regional and exotic. While choosing a currency pair, traders should choose pairs that have high liquidity and less volatility. Out of the four categories, major pairs make the best currency pairs to trade. They include pairs like EUR/USD, USD/JPY, USD/CAD, and GBP/USD.
HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors.
Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance.
You could lose some or all of your initial investment. Do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
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