Top 10 Most Traded Currency Pairs IG International

best forex pairs to trade

One crucial factor to consider when trading forex is the currency pair and time frame. The forex market is open 24 hours a day, five days a week, giving traders numerous trading opportunities. In this article, we will look at which forex pair and time frame is best to trade.

Volume also affects the spread of a currency pair, with tighter spreads being more suited for scalping. Traders should also be aware that many forex platforms will, by necessity, have larger buy-sell spreads on most currency pairs overnight. This currency pair is known for being very volatile, which means that there are plenty of opportunities to make money. Though it is volatile, it operates within a pretty normalized range, which helps to also reduce risk.

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The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. Forex is the largest and most volatile market in the world with hundreds of currency combinations to choose from.

  • In conclusion, the best forex pair and time frame to trade depends on several factors, such as liquidity, volatility, and trading hours.
  • Although the NZD/USD is not considered a major currency pair, it still attracts considerable trading volume due to New Zealand’s agricultural exports and its position as the first market to open each trading day.
  • The EURUSD pair will be under influence of the events that have an impact on the dollar or the euro.
  • The pairing of the euro and the British pound in the EUR/GBP pair is often seen as one of the most difficult pairs to make accurate price predictions for.
  • 53% of retail investor accounts lose money when trading CFDs with this provider.

Spreads on major currency pairs, on the other hand, are generally consistent and do not fluctuate too much, simply because of the massive amounts of volume traded in these pairs during any given trading session. The USD/JPY is a great choice for night traders mostly due to volatility at nighttime hours. Most forex currency pairs that are profitable need to have a level of volatility. Additionally, this currency pair is also very liquid, making it easy to get in and out of trades. The third and final major commodity forex pairing, AUD/USD is heavily influenced by the precious metals and other exports leaving Australia and the international market for those commodities.

Now, You’ll Have to Choose a Forex Broker to Start Trading Forex

With swing trading, typically we can look through more charts to find trading opportunities. Trades based on hourly, 4-hour, or daily charts don’t need our attention every second. The charts aren’t changing much from minute to minute, so we can set our trades and usually leave them for hours at a time. This allows us to maintain focus when we need it, even when analyzing multiple pairs or managing multiple positions.

best forex pairs to trade

They also have a learning center to help investors arm themselves with relevant information when trying to make a profit while investing. Cent accounts are trading accounts that are opened and used in retail foreign exchange trading in cents instead of USD. There is typically no difference between normal accounts and Cent accounts except for the nominal amount, and all transactions take place in cents and are also displayed this way. The popularity of the GBP/USD has been further fueled by significant events, such as the UK government and the Bank of England’s efforts to control inflation in September 2022. This caused the pound to plummet to its lowest level since 1985, drawing traders to capitalize on the currency’s fluctuations. When oil prices rise, the Canadian dollar tends to strengthen compared to the US dollar for two primary reasons.

What are the Most Stable Currency Pairs?

When defining currency pairs, the base currency is the first currency listed. A low spread typically means that the foreign currency you’re considering is highly liquid, and at the time not as volatile. Volatility is a consideration for any stock trading, investing, and market choices. Volatility essentially indicates the movement of an asset’s price, including ups and downs. In Forex trading, this volatility can be capitalized upon to make a profit when selling currencies low or buying them high when currency values rise. When looking for Forex pairs to trade, it’s important to check out those countries’ geopolitical, economic, financial, and political happenings.

It’s popular among traders as the value of AUD is highly correlated with the commodities, so creates a means for FX traders to get exposure to the market without trading futures contracts themselves. The value of Australia’s currency is closely tied to the role and value of its exports in its economy. Therefore, a downward movement in that value could affect the AUD/USD currency pair value, strengthening the dollar to the loonie.

best forex pairs to trade

Our list of the most actively traded currency pairs starts with the EUR/USD, which has the greatest trading volume. All six currency pairs offer the liquidity that investors who trade them need for profits. The best currency pair for you depends on your trading strategy, risk tolerance, and market knowledge. Major currency pairs like EUR/USD or USD/JPY are often recommended for beginners due to their high liquidity and lower spreads. Volatile pairs can offer significant profit potential but may also entail increased risk. Given its low volatility compared to other major currency pairs, the EUR/USD is suitable for small account holders seeking a more stable trading environment.

Number 3: USD to CAD

The USD/CHF is a good choice for night traders as it is one of the most predictable currency pairs. This currency pair has a tendency to move in very tight ranges, which can be exploited by those who know how to trade it. The ability to predict the movement makes it suitable for night trading as well as daytime trading. This is the most popular currency pair to trade at night and for good reason! The EUR/USD is known for being very volatile, which means that there are plenty of opportunities to make money.

best forex pairs to trade

If your prediction was correct you can earn as much as 80-90% of what you invested in the trade. There is also spread which is nothing more than the difference between both, the bid and the ask. The spread often constitutes a commission that brokers take for executing the transaction. On top of it, I’ve shared the statistical data – USD/CNH is a trending market. Whenever you buy the breakout of the highs, the market tends to go up for a few days. If a market has a trending behaviour, then the equity curve should slope up over time.

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More recently, in September 2022, traders flocked to GBP/USD as the UK government and Bank of England battled to keep inflation under control, causing the pound to plummet to its lowest level since 1985. The EUR/USD tends to have a negative correlation with the U.S. dollar and Swiss franc (USD/CHF) and a positive correlation with the British pound/U.S. This is due to the positive correlation of the euro, the British pound, and the Swiss franc.

In addition, this pair is less volatile than many other currency pairs, so it’s less risky for beginners. Understanding forex volatility and its impact on small accounts is vital for traders looking to succeed in the forex market. By considering these factors, traders can make informed decisions and invest wisely in the currency market. By staying informed on relevant market factors and employing effective risk management strategies, traders with small accounts can successfully navigate the complexities of trading this major currency pair. 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.

EUR/JPY is notorious for night trading as the pair comes alive in the late hours. US traders can enjoy this pair as its busy times are typical during nighttime in the US. With less competition from the US markets, there is more profit to be had. All five described currency pairs are widely available on most Forex trading platforms. This makes it easy for traders to access and trade the pair from anywhere in the world.

  • Leverage is a special tool that not only helps individuals to get into the game but can significantly boost profits.
  • The British pound sterling (GBP) is the official currency of the United Kingdom, used throughout England, Scotland and Wales.
  • However, the GBP/USD is the most volatile of the four, and trades placed on this currency pair are best for short-term aggressive positions.
  • Discover the range of markets you can trade on – and learn how they work – with IG Academy’s online course.
  • So, short-term traders will seek out currency pairs with the greatest range of pip movement.

Trade the best forex currency pairs with eToro as your online trading platform. But the value of the Canadian dollar is also heavily correlated with commodity prices, especially the price of oil, as Canada’s economy relies heavily on exporting crude. So, this makes it important to monitor the price of oil to determine the ideal time to buy if you want to exchange USD for CAD. The currency pair is nearly always grouped into the volatile category, and these large jumps have contributed a lot towards the popularity of the GBP/USD. But remember, with greater volatility comes greater risk, making it important to set stops and limits to protect your trades.

Identify the Best Currency Pairs

Since trading pairs include investing in a country’s actual currency, it’s best to educate yourself on their economics, major news, and other relevant news that might affect the currency’s valuation. The proper steps and education are key to making a good trade when looking for the best Forex currency pairs to trade. If you choose these pairs, your Forex trading journey will probably be off to a good start. Due to the wider spread than the USDJPY, and there is rarely any UK news during the Tokyo session, it is better to focus on trading USDJPY for day traders.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. The US dollar and the Canadian dollar have a strong correlation, due to being fiscal neighbours and important trading partners. Historically, the value of the yuan has been low compared to the US dollar because the Chinese government has artificially driven down the price to keep its exports competitive on the global market.

Forex trading offers a variety of currency pairs for traders, making it essential to choose the right pair for your strategy and goals. This guide will explain how to trade the best currency pairs, ensuring you make informed decisions and optimize your trading experience. With ZFX as your broker of choice, you’ll have access to over 40 currency pairs, ranging from major pairs like USD/JPY to more exotic options.

Sunil Dash

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