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Choosing Currency Pairs


kochtgr

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The two main features you need to look at when you want to know which currency pair is the best for your forex trading strategy are the trading volume of the currency pair and the fundamentals of the economies behind the currencies.

 

 

1. Trading Volume of The Currency Pair

 

If you are into forex trading for quite a while, you have probably heard that you should choose the currencies that are traded the most. The basic reason for that is that these currencies are highly liquid which means that you will enter your trades exactly where you want and you will not suffer often from slippage. Another important reason is that brokers offer tighter spreads and lower fees for these currency pairs because there is strong competition between them and additionally the majority of traders trade with these currency pairs.

The most traded currency pairs are 3 and US dollar is included in all of them.

 

The pair with the highest volume is Euro and US dollar or EUR/USD, second in volume is the Japanese Yen and US dollar or USD/JPY, and the third one is the British pound and US dollar or GBP/USD.

 

2. Fundamentals Of Currency Pairs

 

The correlation between two countries economy is a very important factor, which determines how the currency pair of these countries behave in the forex market. For example, the pair of Euro and British pound usually does not make big moves because the economies of Eurozone and Great Britain have a strong correlation and they have common economic interests. On the other hand, pairs like EUR/USD and USD/JPY tend to be more volatile because the correlation of the economies behind the currency pairs is not so strong.

 

Source: Choosing Currency Pairs

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Good post. I think you're right we must invest in most traded currencies as they're in demand and give us profitable trends to trade. I think we should avoid high spread, low demanding pairs and also high slippage pairs and less traded pairs to avoid losses. Euro/usd is my choice or also gbp/yen or euro/yen or usd/yen are my choices as well. I think we must choose carefully in order to make a profit. 

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I say go with the popular, demanding ones since they will help you gain more profits. Even popular one will have bad times as the market fall so you should be careful cause no pairs are golden shield. They have their good times and bad times so beware of that. Euro/usd have been performing really poor lately due to US white house shut down. But it will get better next month or so or at least I know we can go short on usd. Choose low spread pairs, highly demanding and highly traded so to reduce your risks. 

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  • 2 weeks later...

to select the pair certainly in early trade as it concerns our ability to perform analysis with this pair and the pair is in understanding the trade will increasingly make us better in the analysis

sometime we need to consider the facts of currency pair as a beginner

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We must be careful when it comes to choose currency pairs, because with only one mistake the pair that we choose will lead us to demise. I suggest EURUSUD as the most stable yet the most predictable pairs compared to the others. GBPUSD and USDJPy following if you want more pairs with additional income.

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i think EUR/USD is mostly used in the world .mostly people like to deal in this pair.

That is major pair since the liquidity is high that is why many traders keep trading with it. EURUSD including as one of them, but there are others which also contain potential like USDJPY, AUDUSD, or GBPUSD. You should choose between them and try to diversify your currency pair.

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  • 2 months later...

It’s a big choice that of choosing currencies because if we go with wrong one it can be really bad as an unknown pair can do serious damage, hence it’s crucial that we stick to few pairs and that also mainly that we know well about and that is why I only prefer EUR/USD or maybe EUR/JPY.

 

These are pairs that I understand the most so I trade only with them and the other major advantages is to have very low spread of just 0.2 pips with OctaFX broker as they have this low spread for all major pairs, hence even if we try to trade on others yet it’s not so difficult policy to work out especially if we have even little knowledge.

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  • 2 months later...

Of course for most traders around the world i am sure they will prefer EURUSD that will give them more benefit compared to the others, even Yuan and few other currencies is emerging right now but that does not mean those currency will take over EURUSD as the most popular one.

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