Since that’s the main trader’s trading instrument, you have to approach its choice very carefully. First off, you need to keep your eye out for parameters:
That’s the level of demand for specific money units. The higher this indicator, the better. Liquidity depends on the number of sellers and buyers on the market. The most liquid currency pairs are: United States Dollar /Euro; United States Dollar / Japanese Yen; British Pound / United States Dollar. The lower the liquidity currency, the worse.
That’s a difference between the cost of buying and selling. The lower this indicator, the better. Its size is affected by money unit liquidity, mark condition, transactions volume, etc.
•Maximum demand time.
This period needs to coincide with the market player’s activity schedule. Otherwise, this trading will result in little to no utility.
That’s price fluctuations in certain intervals. If the currency rate changes smoothly in the expected range, it tells of low volatility. If the price changes suddenly, there are great leaps in the drop and increase in the rate, this indicates high volatility. High volatility of a money unit is risky but that’s a good chance to earn on the rate difference.
Despite the diversity of currencies in the Forex market, there are pairs in the world considered the most stable. The leaders include United States Dollar and Euro. That said, you can choose any trading instrument at your discretion.Popular currency pairs in Forex
•Euro/ United States Dollar (EUR/USD).
The most popular currency pair among all existing ones. It is it, which shows the highest liquidity indexes. That’s the most straightforward and easy trading instrument for a beginner trader. The currency volatility may be affected by different geopolitical events in the US and EU, as well as news from the US and EU. It’s quite easy to predict the behavior of the pair.
•British Pound / United States Dollar (GBP/USD).
Yet another instrument, which may fit a beginner. However, spikes are typical of this pair. It is also sensitive to various political events taking place in the country. For example, the unemployment rate in the Albion, inflation, etc. may affect the price. Keep in mind that sometimes British Pound behaves unpredictably.
•United States Dollar / Canadian dollar (USD/CAD).
Not only geopolitical events in the countries but also raw material prices influence the rate of this pair. The Canadian currency depends heavily on the oil rate and world output. There’s a correlation between the Canadian dollar and the economy of China. This instrument may also fit a beginner trader, however, it will be harder to predict the behavior of the currencies in this case.
•Australian dollar / United States Dollar (AUD/USD).
That’s quite a stable instrument suitable for carrying out successful trading. The pair perfectly fits beginners making it possible to work on fundamental and technical analysis. The Australian dollar is often called an agricultural currency because any natural phenomena can cause its spikes: droughts, floods, small harvests, etc. Australia also exports gold, which means its cost on the global market should be considered too.
•United States Dollar / Swiss franc.
One of the most conservative pairs. Its advantages are the lack of leaps in currency rate, simple forecasting, sound liquidity regardless of the time of day. It’s very convenient to work with this instrument in a crisis since it is a safe haven.The best currency pairs
There are lots and lots of currency pairs, which can be used for Forex trading
. However, beginner traders are recommended to focus on one pair. This will allow reducing the risk level and learning the ropes of trading. When choosing a suitable option the following criteria should be considered:
•Your broker’s trading requirements set for a specific pair.
They are fees, spreads, order execution speed, etc.
•Availability of public information on the chosen monetary unit.
These may be newspapers, TV news, data from the Internet, etc. Without data, you cannot forecast the behavior of currencies to the full.
The money units of countries in a brittle geopolitical situation feature the most risk factors.
Once a suitable instrument is selected, it needs testing. Beginners are better to do it using a special demo account. In doing so, you’ll not lose real money.The best options for beginners are:
•NZD/USD.For experienced traders:
You shouldn’t go for too many pairs all at once. Many experienced traders intentionally pick one and only one instrument and focus on it. Besides, by paying attention to a great number of monetary units you risk missing the important details and losing profit. Whatever the case is, it is you who has to select the most suitable option.