As a new trader, one of the biggest questions that you may have is what currency pairs to trade on the forex market. If you are looking for a profitable first pair or just want to make a few extra dollars, then having an idea of what currency pairs to trade can be quite helpful. It’s imperative to consider the characteristics of each currency pair before entering it into your chart. This will help you to know which ones have the potential to become profitable over time.
Finding the right currency pairs to trade for beginners can be a challenging task. In this post, we take a look at various factors that you should consider when selecting currency pairs. We also look at some of the key characteristics that will make up your successful trading strategy when trading these currency pairs.
1. EUR/USD
Traders who are new to forex can benefit from the low spreads, low volatility and liquidity features of EUR/USD, one of the most popular currency pairs in the world. Despite the euro’s stability, the U.S. dollar is the world’s most traded currency. Due to the relative strength of the two currencies, EUR/USD is one of the most predictable currency pairs. As a highly liquid currency, the EUR/USD pair moves very little in huge price range movements, which makes it one of the best currencies to trade for any level of trader.
2. GBP/USD
A popular currency pair in the world is GBP/USD, also known as the Cable. British Pound (GBP) and US Dollar (USD) are two of the world’s most liquid and major currency pairs. The pair has a strong correlation with the USD/JPY pair and is most active during the London and US trading sessions. Due to its low spreads and ability to generate large profits through small movements in the market, GBP/USD is an excellent currency pair for beginners. In addition, this pair is less volatile than many other currency pairs, so it’s less risky for beginners.
3. USD/JPY
Beginners often trade the USD/JPY currency pair. This pair has a tendency to move in large, slow-moving trends, which makes it easier to identify entry and exit points. The pair is also known for its low volatility and tight spreads, making it an ideal pair for traders looking to make small profits on low-risk trades. As Japan’s economy is heavily influenced by the US economy, USD/JPY trades can be influenced by news and events from both countries. In order to maximize potential trading opportunities, it is important to stay up-to-date with economic news from both countries.
4. USD/CHF
The USD/CHF currency pair is also a good choice because of its low volatility, which makes it a stable pair. Among the most powerful currencies, the US Dollar is the most reliable, followed by the Swiss Franc. Trading this pair is ideal for those looking for a more predictable market with a low spread. The pair is often seen as a safe haven for traders looking to enter a low-risk trade.
5. AUD/USD
Forex beginners often start with AUD/USD, one of the most popular currency pairs. With its low spread and high liquidity, this pair is considered a great pair for practicing trading. Beginners might find the AUD/USD pair to be an excellent choice, since it is more predictable and less likely to spike or drop suddenly. In many studies, this pair has also been cited as one of the least volatile.
In conclusion, the best currency pairs to trade for beginners are EUR/USD, GBP/USD, USD/JPY. These three pairs offer the most chances for novice traders to make successful trades, though not without the ability to use fundamentals and technical analysis for setup. Beginners should also have a solid understanding of risk management techniques.