Best currency pairs for beginners to trade
When looking for the best currency pairs to trade as a beginner in the forex market, there are a lot of things to consider. You have to think about the fact that each currency stands for the economy of a country. This makes managing two currency pairs a complicated task because, when trading with two currencies, you’re actually dealing with two major economies as well as their relationship with one another. As a beginner, some of the factors that you have to keep in mind are liquidity and stability.
With regards to stability, you have to trade currency pairs that have predictable fluctuations, less volatility, and high liquidity as well as ones that are not too difficult to trade, with less expensive spreads. Now that we know the importance of currency pairs, here are the best currency pairs for forex traders.
USD/JPY
This currency pair is a profit-making match. The United States and Japan are two of the world’s most powerful countries. The currency pair of USD/JPY is very liquid and is the second most traded currency pair on the foreign exchange. The USD/JPY is a good trading tool for beginners who want to learn trading fast, especially those who wish to learn about volatility. My advice, however, is that too much money should not be invested at the initial stages until you have understood fully how things work with this currency pair.
The USD/JPY is one of the best currency pairs today but also one of the currency pairs most impacted by political issues; something you should always bear in mind while trading. The USD currency is usually stable compared to the JPY currency, which often tends to swing swiftly up and down. As a trader, you can make a lot of money with the JPY currency as it creates a predictable pattern based on time and season. The Japanese currency is highly reliant on many factors related to the economy, so as a trader, you should be able to create a strategy based on commodity prices and economic news. Apart from these economic factors, other random factors like natural disasters and political issues also affect the Japanese economy, and at such times, traders need to leave the market as the currency is subject to high volatility.
EUR/USD
The EUR/USD currency pair is one of the best currency pairs for trading, one which many trading strategies have been developed with. This pair constitutes two of the largest currencies in the world, which means the pair has high liquidity and stability. The popularity and efficiency of the currency pair make it always available for any size of the trade, having low bid spreads.
Moreover, the trading market is not likely to influence the currency pair, which makes it easier to create strategies and analysis that would profit traders. The EUR/USD currency pair is often known as the best place for beginners to start. This is reasonable because this currency pair can be hedged by other trades like the USD/CAD currency pair. In as much as this is a good currency pair, it is not a good idea to initiate too many trades with the USD all at once because if the price takes a sharp rise or fall, it can be disastrous for traders.
This is one of the best and most traded currency pairs, but as we have highlighted, the knowledge of proper use is important, especially for beginners.
GBP/USD
The GBP/USD is also one of the best currency pairs in the market today as it trades in one of the largest markets in the world, which is the British pound. This currency pair is highly predictable as many traders use support and resistance levels to try to understand the market using this currency pair.
This is not only the best but also the oldest currency pair available on the market today because it is backed by stable economies, making it very liquid for trading.
This currency pair maintains a good relationship with the EUR/USD currency pair. Specifically, it mirrors it so when it comes to market capacity, the British pound and euro perform almost identically. Typically, traders like to use the GBP/USD to hedge the EUR/USD or not involve both currency pairs with one another.
This is because it would be fruitless to trade the EUR/USD and GBP/USD in the same direction as they would only operate in correlation without adding any advantage to one another. As we said earlier, this is one of the best currency pairs to trade, but when it comes to trading the EUR/USD and GBP/USD currency pair at the same time, it is best left to experienced traders.
USD/CAD
The combination of the United States dollar and the Canadian dollar makes an interesting pair and is worth getting into the list of one of the best currency pairs for traders. The fluctuation of this currency pair is based on their commodities, something both countries do together because they trade similar commodities with few exceptions. The differences in trading and commodities are something that might be difficult for beginners but an opportunity that professionals take advantage of all the time.
This does not mean that the USD/CAD is not a good currency pair for beginners; it is one of the best because of its stability, which is something beginners enjoy using when they trade. There is also a lack of divergence in these currencies due to the geographical proximity of their markets. But that does not mean that there are no opportunities to profit from. Traders who want to make use of this currency pair should learn to trade with the news because the Canadian dollar is often affected by political issues.
Conclusion
Trading forex demands dedication and requires a lot of information. As you trade, you gain a lot of experience, which is something that would help in making your trading adventure a successful one. The demand for information – useful information – is the reason for this article, and you have the responsibility to find, digest and make the best use of it.
