Each currency pair’s exchange rate is influenced by various economic, political, and financial factors in the respective countries. Traders can buy or sell currency pairs based on their predictions for the relative value between the currencies. However, because exchange rates change quickly and often, trading currencies comes with high risk.
- If you can only analyse the Forex market in the evening, do it at the same time each day.
- What’s the difference between major currency pairs, minor currency pairs and exotic currency pairs?
- Our list of the most actively traded currency pairs starts with the EUR/USD, which has the greatest trading volume.
This pair tends to negatively correlate with the AUD/USD, GBP/USD, and the EUR/USD. With so many combinations available to trade, how can you know which currency pairs to trade and in order to bring the most growth to your account? If we go by sheer volume and liquidity, the USD/EUR is the most popular and widely traded pair on the market. However, depending on the individual results that you’d like to see, other pairs may be more attractive to trade. In the list of the top 10 best currency pairs to trade, NZD/USD is another popular currency pair. NZD/USD is the shortened form of the New Zealand dollar against the US dollar.
What Does Popularity of Currency Pair Affect?
The overlap between the Sydney and Tokyo markets trading offers a two-hour period of increased price fluctuation as there are more traders in the market. The one-hour overlap between the Tokyo and London markets can also asian trading session see changes in price action, although there is less time for large fluctuations. The reasoning for this is that becoming familiar with a currency pair significantly increases your chance of successful Forex trading.
- This relationship is due to the U.S. dollar being the base currency in all three pairs.
- In this article, we will explore the top forex currency pairs you need to know and provide a few tips for trading them at your best.
- Having open trades with positive correlation increases your risk.
- First off, many of the major currency pairs are correlated in their price movement, meaning they move almost identical to one another.
AximTrade provides a comprehensive set of educational resources, technical analyses, and educational materials, making it one of the best platforms for worldwide traders. Discover luxury trading with a minimum deposit requirement, low spreads and a wide range of trading instruments from a leading broker. The AUD/JPY pair can also offer heightened volatility during overnight trading. While the AUD is tied to the Chinese economy, the yen is strongly influenced by the US economy as a major global technology manufacturer and service provider. For the first three or four hours, liquidity is high as London and the USA are trading Forex. But, the best time to trade Forex is to trade at the same time each day.
You might add trendlines and support and resistance lines to your charts. Sometimes it can take years to develop the skills and the mindset to become a profitable Forex trader. Whilst there aren’t any shortcuts, it’s possible to master the basics of Forex trading and start making profits. Once free of restriction, GBP/USD momentum gathers pace, which can mean some serious profits for Forex day traders. There’s a long history of trade between the United Kingdom and the United States.
NZD/USD is a currency pair that likes to range, so there is often a long wait for a breakout. You can, however, trade the 100-pip range as long as you remain alert for a breakout. EUR/USD descending triangle pattern has volatility, but not so much as to create price spikes. Oil prices influence the Canadian dollar, so it’s worth checking the charts for oil to see if the prices are bearish or bullish.
The Best Currency Pairs to Trade in 2022
The U.S. currency is the most actively traded currency in the world. The reason for this is the perceived stability and strength of their economies and political environments. Because of this, the currency pair is the most viable for trading purposes. The major currency pairs are the most predictable, mainly EUR/USD. The best currency pairs to trade right now are the Forex pairs that show potential movement on the chart.
New Zealand dollar (NZD) is the base currency, and the US dollar (USD) is the quote currency. The Euro and the US dollar are very popular because it represents the two largest economies in the world. In all currency pairs, the daily trading volume of the EUR/USD is 28%. To become successful in forex trading in the long run, a beginner should try to take as little risk as possible when trading Forex.
AUD/USD
All six currency pairs offer the liquidity that investors who trade them need for profits. You may want to know the most predictable currency pairs and, in this article, we will discuss what makes one currency pair easier to trade than another. But we will look at a minor Forex cross pair with significant liquidity and volume how to buy shiba inu coin on binance that could be a choice for a Forex trader with some experience of trading the Forex market. Any forex pair may provide swing trading opportunities over time. The ideal swing trading forex pairs should have sufficient liquidity and enough volatility to create price changes that lead to swing trading opportunities.
Why are liquidity and volume important to Forex traders?
“The Swissie” is a combination of the US dollar and the Swiss franc. For many years, the financial stability of Switzerland has been used as a ‘safe haven’ for investors of the forex market, who will rely on trading the CHF in times of market volatility. Therefore, this is a popular forex pair for traders when the economic or political situation of a region is uncertain.
Traders prefer such currency pairs because their liquidity and trading conditions are better than those of other pairs. Try your hand at currency trading by opening a demo account on JustMarkets. It’s a quick and risk-free way to master trading in the most liquid financial market. A practice account will help you learn trading basics and develop a strategy before investing money. For instance, if you don’t want to spend your night trading, it’s better to choose currency pairs that are active in the morning or afternoon of your time zone. This high price movement makes the GBPUSD a hotspot for traders who are looking to make high gains from short-term trades.
What Is a Currency Pair? Major, Minor, and Exotic Examples
The major currency pairs are the best to trade Forex because they have good liquidity and volume. Every Forex broker has the majors and the minor crosses available for trading Forex. Forex traders buy and sell currency pairs to make a profit from the daily price fluctuations.
The next most actively traded pair was the USD/JPY, with high liquidity and a market share of 13.5%, slightly higher than its prior 13.2%. This pair has been sensitive to political sentiment between the United States and the Far East. The price for a currency pair is the amount of the quoted currency required to purchase one unit of the base currency. Mark up the support and resistance areas on the charts and set alerts for when the price reaches these zones.