Forex trading is one of the most popular and profitable trading styles in the world. With a daily trading volume of over $5 trillion, the forex market is the largest financial market globally. Forex trading involves buying and selling currencies in pairs with the aim of making a profit. However, not all currency pairs are created equal, and some are better to trade than others. In this article, we will discuss the best pairs to trade in forex.
Major currency pairs
Major currency pairs are the most traded pairs in the forex market. They include the US dollar (USD), euro (EUR), Japanese yen (JPY), British pound (GBP), Swiss franc (CHF), Canadian dollar (CAD), and Australian dollar (AUD). These currencies are considered major because of their high liquidity, stable economic performance, and low volatility. Major currency pairs are ideal for beginners because they are easy to trade and have low spreads.
EUR/USD
The EUR/USD is the most traded currency pair in the forex market, accounting for almost 30% of the total trading volume. The euro and the US dollar are the two most powerful currencies globally, making the EUR/USD an attractive pair for traders. The EUR/USD is known for its low volatility, making it ideal for day traders and swing traders.
USD/JPY
The USD/JPY is the second most traded currency pair in the forex market, accounting for almost 15% of the total trading volume. The pair is popular among traders because of its high liquidity and low spreads. The Japanese yen is a safe-haven currency, making it attractive during times of economic uncertainty.
GBP/USD
The GBP/USD is also a popular currency pair, accounting for almost 10% of the total trading volume. The pair is known for its high volatility, making it ideal for traders who are looking for big profit opportunities. The GBP/USD is affected by political and economic events in the UK and the US, making it a good pair to trade for news traders.
Cross currency pairs
Cross currency pairs are currency pairs that do not involve the US dollar. They include the euro (EUR), Japanese yen (JPY), British pound (GBP), Swiss franc (CHF), Canadian dollar (CAD), and Australian dollar (AUD). Cross currency pairs are not as liquid as major currency pairs, making them more volatile and harder to trade.
EUR/JPY
The EUR/JPY is a popular cross currency pair, accounting for almost 12% of the total trading volume. The pair is popular among traders because of its high volatility and liquidity. The EUR/JPY is affected by economic events in the eurozone and Japan, making it an ideal pair for news traders.
GBP/JPY
The GBP/JPY is another popular cross currency pair, accounting for almost 5% of the total trading volume. The pair is known for its high volatility, making it ideal for traders who are looking for big profit opportunities. The GBP/JPY is affected by political and economic events in the UK and Japan, making it a good pair to trade for news traders.
Exotic currency pairs
Exotic currency pairs are currency pairs that involve currencies from emerging economies. They include the Brazilian real (BRL), Indian rupee (INR), South African rand (ZAR), and Turkish lira (TRY). Exotic currency pairs are the most volatile and hardest to trade because of their low liquidity and high spreads.
USD/BRL
The USD/BRL is a popular exotic currency pair, accounting for almost 2% of the total trading volume. The pair is popular among traders because of its high volatility and liquidity. The USD/BRL is affected by economic events in Brazil and the US, making it an ideal pair for news traders.
USD/INR
The USD/INR is another popular exotic currency pair, accounting for almost 1% of the total trading volume. The pair is known for its high volatility, making it ideal for traders who are looking for big profit opportunities. The USD/INR is affected by political and economic events in India and the US, making it a good pair to trade for news traders.
Conclusion
In conclusion, the best pairs to trade in forex are major currency pairs because of their high liquidity, stable economic performance, and low volatility. However, cross currency pairs and exotic currency pairs can also be profitable if traded correctly. Traders should always conduct thorough research and analysis before trading any currency pair. It’s also important to use risk management tools like stop-loss orders and position sizing to minimize losses and maximize profits.
