LeTechs Forex Blog - What are the Best Currency Pairs to Trade

30 Apr

What are the Best Currency Pairs to Trade

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Two frequent questions to facilitate I get from positive forex traders are:

# Which currency pairs are best to trade?

# What are the best times to trade?

Part – I: Types of Currency Pairs:

There are 3 major categories of currency pairs:

Majors
Crosses
Exotics

The subsequent points will make clear which currency pair drops into these 3 categories & the Advantages or Disadvantages of both.

Major – Currency Pairs

“Major” forex currency pair is the foremost countries that are paired with the US dollars. We are also counting silver and gold in this list from they are extracted in US dollars & the key factor is we trade them frequently.

EUR/USD – Euro vs. the US dollar (Fiber)

GBP/USD – British pound vs. the US dollar (Sterling, Cable)

NZD/USD – New Zealand dollar vs. the US dollar (kiwi)

AUD/USD – Australian dollar vs. the US dollar (Aussie)

USD/JPY – US dollar vs. the Japanese yen (the Yen)

USD/CHF – US dollar vs. the Swiss franc (Swissie)

USD/CAD – US dollar vs. the Canadian dollar (Loonie)

XAU/USD – Gold (Commodity pairs)

XAG/USD – Silver (Commodity Pairs)

First off, several of the major currency pairs are unified in their price movement, meaning they move almost one and the same to one another. For ex; the EURUSD & the GBPUSD be liable to move in the similar common direction (not accurately the same), the GPB/USD is naturally a spot more unstable than the EUR/USD, except if the EURUSD is in an understandable up or down trend you can securely assume the GBPUSD is in the identical trend, therefore we say they are positively linked.

USDCHF is negatively connected to the EURUSD, so if the EURUSD is affecting higher the USDCHF is nearly all probable touching lower. You will locate if you obtain EURUSD chart & a USDCHF chart of the equal time frame & cleave to one right side up & one upside down, they will look comparatively similar, this is for the reason that they are negatively connected.

EURUSD is for the most part usually traded pairs, and consequently, it carries the maximum volume of all currency pairs, this also way it is the most fluid, which is one more reason I desire it over its linked counterparts. The EURUSD makes up concerning 27 percent of forex trading volume. After that, the USDJPY at 13 percent, pursued by the GBPUSD at 12 percent of the whole forex trading volumes

Commodity currencies

A commodity currency is a name known to currencies of countries which depend on a great deal on the export of assured raw materials for earnings. The foremost currencies that are in addition well thought-out Commodity Currencies are the AUD, NZD, & CAD. Gold and silver are real commodities, so they can also be measured Commodity Currencies & once more they are traded in US dollars, as we noted over.

My occurrence trading the commodity currencies is with the intention of AUDUSD, NZDUSD, XAUUSD & XAGUSD are the best to trade, I have a tendency to stay away from the USDCAD as I find it fires off countless “false” trading signals, this might have somewhat to do with it being seriously prejudiced by the cost of crude oil. Suchlike the reason, I usually avoid trading the USDCAD & recommend my clients do the same.

Crosses - Currency Pairs

The “crosses” are those pairs to facilitate are not paired with the US dollars such as:

EUR/AUD – Euro vs. the Australian dollar

EUR/GBP – Euro vs. the British pound

EUR/NZD – Euro vs. the New Zealand dollar

EUR/JPY – Euro vs. the Japanese yen

EUR/CHF – Euro vs. the Swiss franc

EUR/CAD – Euro vs. the Canadian dollar

EUR/JPY – Euro vs. the Japanese yen

AUD/NZD – Aussie dollar vs. the New Zealand dollar

AUD/JPY – Australian dollar vs. the Japanese yen

AUD/CHF – Australian dollar vs. the Swiss franc

AUD/CAD – Australian dollar vs. the Canadian dollar

GBP/AUD – British pound vs. the Australian dollar

GBP/JPY – British pound vs. the Japanese yen

GBP/CHF – British pound vs. the Swiss franc

CHF/JPY – Swiss franc vs. the Japanese yen

NZD/JPY – New Zealand dollar vs. the Japanese yen

CAD/JPY – Canadian dollar vs. the Japanese yen

Now, I am not recommending traders trade every one of these crosses; there is definitely a short-list of the crosses that I trade & that I advise all my clients to trade. The pick out looks like this: AUD/JPY, EUR/JPY, GBP/JPY, & NZD/JPY.

These 4 cross pairs are the major widely followed & make a pleasant accumulation to the key pairs mentioned above.

Exotics - Currency Pairs

“Exotics” are nothing but individual’s pair that consists of increasing & growing economy rather than developed & already developed economies similar to the majors. Here is a list of a few more commonly traded exotics:

EUR/TRY – Euro vs. the Turkish lira

USD/TRY – US dollar vs. the Turkish lira

USD/ZAR – US dollar vs. the South African rand

USD/MXN – US dollar vs. the Mexican peso

USD/BRL – US dollar vs. the Brazilian real

The exotic currency pairs are not the finest place to begin as a hopeful forex trader, I still don’t trade them & here are the reasons why. The exotics are much fewer liquid than the majors & yet the crosses. This means there is additional risk put up into the exotics, this creates them extra prone to “slippage” & it moreover earnings they have wider spreads than the majors & the crosses.

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