With 196 countries in the whole world, there is a handful of currency pairs to trade. The question is, which currency pair are worth trading and why? What do most traders trade? Which currency factors influence the trading success?
Major Currencies
The most advisable currencies for beginners in forex trading are:
· Euro (EUR)
· US Dollar (USD)
· British Pound (GBP)
· Japanese Yen (JPY)
· Canadian Dollar (CAD)
· Swiss Franc (CHF)
· Australian Dollar (AUD)
Favorite Pairs
The basic rule of forex success is "the more you know about the currency you trade, the better". The most information and resources, including daily expert analytical data and advices, are available for the following major currency pairs:
· EUR/USD
This is the most popular pair among traders. It has the lowest spread among most brokers. The pair follows the basic technical analysis and usually isn't too volatile, meaning that there is less risks and closer stops. Besides, there are tones of information on the net for this pair, which makes decision making much easier.
· GBP/USD
This is one of the favorite pairs, because of the possible large jumps and profitable pips. Keep in mind that, whenever the profit opportunity is higher, the risk is higher too. This pair belongs to rather volatile group.
Despite the volatile warning, traders love this pair, since there is plenty of market research and analysis available, which protects from making stupid trading mistakes!
· USD/JPY
Here is another lovely currency pair. It is offered with low spreads and follows smoother trends, compared to other pairs. Trading usd/jpy promises a cheerful ride with lots of profitable opportunities.
Why Are They the Easiest to Trade?
Because the mentioned currency pairs are favored among traders, the volume of trades creates the needed liquidity necessary to make daily profits.
Also, the major currency pairs have tight spreads, compared to other available choices. The exception for this phenomena is GBP/USD pair, due to its' volatility.
EUR, GBP and JPY are traded against US dollar, meaning that the most active and, therefore, profitable hours are during the New York trading session.
Lots of online resources - expert analysis, seminars, webinars, blogs, forums, ebooks etc. - are available on a daily basis. You don't have to break your head looking for information or advices.
Most forex brokers offer, for example, daily analysis which can be found either on the broker's site, or receive it via email. That is sure helpful during the decision making!
Which Currency Pairs are Better Avoided?
My advice, stay away from all the exotic currencies for which there is almost no information on the net. In order to trade such uncommon pairs, forex trader requires extra knowledge and some kind of access to details and analysis needed for trading.
Also, it is a good idea to keep away from currency pairs with high spreads. Please note that spreads may vary from one broker to another, so don't "disqualify" a selected currency before first checking spreads with couple of brokers.
The acceptable spread is 2-3 pips. When things get above 6 pips, currencies become volatile, meaning that an inexperienced trader may find it extremely difficult to trade.
