Since mid-July, the price has stuck on a strong historical area of support at $0.7320. The susceptibility of the GBPUSD to news and reports from the Federal Reserve and the Bank of England also fuels its volatility. The AUD/USD (Australian Dollar/US Dollar), or ‘Aussie’, is greatly affected by mining commodities, farming of beef, wool and wheat. The Aussie also tends to do well when China does well because the two countries are big trading partners.
This means you’re likely to make more profit within a day on the GBPUSD than on the EURUSD. However, this also means your losses on the GBPUSD would be bigger than on the EURUSD. Therefore, match the currency pairs you’re trading with your risk appetite.
You can use the economic calendar to track future economic data releases which may affect the forex market. The AUD/USD is heavily affected by Australia’s exports of precious metals and other commodities. Because of its strong economic ties with China, the AUD/USD pair is also suitable for taking advantage of both Asian and American market moves. This instrument also offers a high level of liquidity, which will appeal to swing traders. The USDCAD tends to move in lockstep with the oil market, which can help to identify if the pair is stuck in a range and therefore provides good opportunities for swing traders.
- Forex is the most liquid financial market with over $6.6 trillion traded 24 hours a day for five days a week.
- This causes traders to miss out on further gains while exposing their account to additional losses.
- On the other hand, minor currency pairs and exotic currency pairs have lower liquidity, wider spreads, and higher volatility.
- The USD/CHF, a major currency pair representing the exchange rate between the US dollar and the Swiss franc, is an attractive option for forex pair beginners and those interested in daytime trading.
- The most traded currency pair is the EUR/USD, most likely because of the global prominence of the economies of the European single market and the United States.
This can be both a benefit and a drawback for beginners, as greater price movements can lead to higher potential profits but also increased risk. When trading the USD/CAD, monitoring oil prices is essential, as Canada’s economy relies heavily on crude oil exports. Consequently, fluctuations in oil prices have a significant impact on the Canadian Dollar’s value. Understanding this correlation can help beginner traders make informed trading decisions, allowing them to capitalize on price movements in the forex market. As a beginner trader, this article will allow you to see and understand which forex pairs are best to get you on your trading journey.
If the UK economy grows more rapidly relative to the US, the pound would be expected to gain value against the US dollar and vice versa. The quotation price of GBPUSD is also influenced by the respective interest rates set by the Bank of England (BoE) and the Federal Reserve (Fed). No matter what information your analysis predicted in your last trading session, continually reassess the charts before taking a Forex trade. But the price could be forming a new pattern, falling off a trendline or starting a period of consolidation.
What are forex night trading hours?
This is why many traders prefer to trade major currency pairs (EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, GBP/JPY, and USD/CAD). This group of currencies is highly liquid and, as a result, unlikely to experience significant unexpected price moves. Some minor currency pairs can become a good alternative (NZD/USD, EUR/CHF). Among the exotic currency pairs, USD/CNY offers some degree of price stability due to the strong positions of the Chinese economy. However, keep in mind that low liquidity tends to increase buy-sell spreads. Remember that only you can identify what are the best currency pairs to trade at night that are suitable for your trading strategy.
The Best Currency Pairs to Trade in 2021
Money flow equals price movement and, as you are trying to make money from the price fluctuations, this helps you enter and exit a Forex trade with a profit. USD/CHF is a popular currency pair for Forex beginners and professional Forex traders. Liquidity is good, and the pair is easy to read for technical analysis. Foreign exchange (forex) traders have the luxury of more highly leveraged trading with lower margin requirements compared to traders in equity markets. But before you jump headfirst into the fast-paced world of forex, you’ll want to know about the currency pairs that trade most often.
What about Minor Forex Pairs for Beginners?
To reduce risks in Forex trading, employ smart risk management by setting stop-loss orders, diversifying your portfolio, and sizing positions properly. Stay informed about market conditions and economic events to make cautious trading choices. For instance, EUR/USD and USD/JPY tend to have a negative correlation which will most likely result in losses for one pair and gains for the other pair. Thus, this offsetting result will enhance overall portfolio stability and risk management. Political stability enhances investor confidence, strengthening the currency and its pairs. For example, the Swiss franc (CHF) benefits from Switzerland’s stability.
US CPI provides new scenarios for EUR/USD and government bond yields
Any of the 10 top Forex currency pairs are suitable for beginners if trending and show explicit price action. In addition, the Aussie has enough volatility, liquidity, and stability to sustain descending triangle pattern its position as one of the most traded currency pairs in the world. As a result, the chances of successfully trading the AUDUSD using fundamental and technical analyses are quite fair.
The vast number of trading instruments forex provides is a huge advantage as it helps you diversify your trading portfolio. But it can as easily turn into a disadvantage, when you get overwhelmed by the sheer number of currency pairs to choose from. The AUD/USD currency pair captured 5.1% of forex market share, compared to its previous 5.4%. It tends to have a negative correlation with the USD/CAD, USD/CHF, and USD/JPY pairs due to the U.S. dollar being the base currency in these cases. The USD/JPY, as you would expect, is affected by economic and geopolitical news impacting Japan and the USA. Given that both currencies are considered safe havens, it can, at times, be difficult to assess.
What is the Safest Currency Pair to Trade?
We’ll also show you how to choose other currency pairs should you want to broaden your trading options. Historically, currencies had to be exchanged into US dollars before they could be exchanged into other currencies. Aligning currency pair choices with individual trading objectives and risk tolerance levels is essential. For conservative traders, stable major pairs like EUR/USD are a prudent choice. Major currency pairs like EUR/USD (euro and US dollar) and USD/JPY (US dollar and Japanese yen) feature economically influential regions.
This tip may not be useful to swing and positional traders, since they’re more into long-term trades. But day traders and scalpers should keep this tip in mind, as their chances of success rely on how much profit they can make within a currency pair’s active session. 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 https://g-markets.net/ zone. From a fundamental viewpoint, this currency pair is very reactive to the news, especially to the reports from the United States Federal Reserve and the European Central Bank. And from a technical viewpoint, the EURUSD can be successfully traded using technical analysis. Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors.
The Reserve Bank of Australia (RBA) also has major influence over the AUD/USD. Traders enjoy tight bid-ask spreads on the GBP/USD due to its high liquidity. The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice. The author has not received compensation for writing this article, other than from FXStreet. Liquidity, volatility, spread, and the likelihood of slippage are the most significant factors.
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