Do you know that ‘what you trade’ is equally as important as ‘how you trade’ in Forex? It’s not just about charts & news that delivers success. It’s also about the availability of setups and information. So, what are the currency pairs that can ooze setups and information every day for you? Here is a detailed list.
#1 EUR/USD: The best currency pair to trade
It’s a no-brainer. EUR/USD is the mother of all currency pairs. Since this is a currency pair that represents two of the great economies in the world, you will not be short of drama – movement and drama.
On any given day, it has an average trading volume of more than 200K. As a result of this abundant liquidity, the spread is minimum as well.
Having said that, it also has low volatility. So, you can’t witness drastic moves which could put a lid on your profitability unless you trade high volumes. On the brighter side low volatility offers stability and hence the EUR/USD can lure more investors than traders.
Do you feel you are not being rewarded for your effort in EUR/USD? Then your answer is GBP/USD. Like the European Union, Great Britain is also a major economy and its transaction against the USD plays a pivotal role in the economy.
So, you get all the recipes in EUR/USD – information, trade setups – but with much better volatility. The trading volume also exceeds 200K on any given day because of the likening of the forex community.
To spice it up, GBP always has a tendency to dominate news forums and bring the adrenaline into the market with events like Brexit.
When the market is in risk-off mode, USD/JPY is the pair to concentrate upon. It takes the role of front runner and dictates the movement.
And people love trading USD/JPY because of its simplicity – risk ON or OFF. You don’t need to decode complex news information.
It has a decent trading volume and is less volatile compared to the GBP/USD.
Australia is rich in natural resources, especially metals. And because of its geography, it has a close relationship with Asian countries, and China exports raw materials for its industries.
Since currencies of most Asian countries are not attractive and the unavailability of Yuan to Forex traders make AUD a proxy for these currencies. Market players trade the Asian growth story through AUD/USD.
AUD is countercyclical offering traders an opportunity to diversify their portfolios. Further, its dependence on metals makes it volatile enough to reward the traders.
All the pairs discussed above are major pairs. They have the common factor of USD which makes trade in tandem with DXY. But EUR/GBP is a minor pair that has a greater significance in the forex world.
There is significant cash flow between the two economies – the European Union and Great Britain. Technically, the pair will be stable in a broader range, but it offers volatility in the short-term making it an attractive trading instrument to small-time traders.
It’s completely independent of USD. Hence, if you can’t ascertain the trend EUR/GBP is the currency to go.
#6 JPY Pairs
What is the next best alternative to USD? It’s Japanese Yen. The major currencies against USD namely EUR, GBP, and AUD offer much better volatility than their JPY counterparts.
The advantage of trading JPY pairs is that it travels in tandem with USD on a usual day. The availability of information, market coverage, technical setup, and trading volume are also similar to that of USD pairs.
So, when you have the make more money with the same information, why miss it? And this is exactly the same reason forex traders love JPY pairs.
#7 Minors among the Best currency pairs to trade in FX
The world doesn’t start and end with USD. It’s a myth many newbies hold. Speaking of myths, we have debunked many more here.
There are many other major players in the market. Although they are called minor pairs, they still present trading opportunities to you.
EUR/AUD is the currency that is most closely related to risk and gold. It is the barometer to define risk aversion in the world trading community.
Like AUD, NZD is also closely related to Asian economies. And it has no intervention from the government, which makes it more market-driven. Hence, traders look at NZD/JPY to trade the growth story.
The Swiss Franc is one of the major currencies in the world. Although it’s not a great player in the export and import domain, it’s an investment-friendly economy. Investors around the world park their money in the Swiss banks making it an attractive trading prospect for Forex traders.
The forex market can be rewarding when you know ‘what to trade’, ‘when to trade’, and ‘how to trade’. We have covered the best currency pairs to trade in this article for you. To know when to trade, we advise you to read Best forex trading sessions. And if you haven’t figured out how to trade yet, then Trend Power is your go-to Forex tool.