Select Page

With IG, you can trade the USD/CNH currency pair – CNH being the offshore version of the yuan that is traded outside of mainland China. Yuan is referred to as CNY only when it is traded in the onshore Chinese market. CNH has traditionally not been as tightly controlled as CNY by the Chinese government, which means it can be more volatile. This volatility can make it a better choice for speculative trading. Currencies are always traded in pairs because when you buy or sell one currency, you automatically sell or buy another. In every currency pair, there is a base currency and a quote currency – the base currency appears first, and the quote currency is to the right of it.

forex best pairs to trade

Reviewing news and economic data also helps to prepare you for the trading day because news releases can lead to price spikes and market gaps. Being aware of upcoming news keeps you ahead because you’ll have enough time to plan your trades accordingly. Likewise, if you’re a counter-trend or a mean reverting trader, you’ll want to trade currency pairs that have mean reversion characteristics. Spreads for minor currency pairs are often wider because there are fewer people buying and selling them in the market at any given time, resulting in less liquidity. Majors are the most actively traded currencies, constituting about 85% of the total FX volume.

Introduction to financial markets

In normal market conditions, there’s often between a 1-5 point spread between the bid and offer on major currency pairs and liquid cross rates. But when liquidity is low, this gap can widen and so more capital would be needed to cover your fees. The major currency pairs comprise up to 75% of forex volume, which makes them easier to trade than minors and exotic formax prime capital review pairs because they have the majority of buyers and sellers. Not surprisingly, all of these pairs contain the US dollar – due to the sheer size of the US economy. The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. 75% of retail client accounts lose money when trading CFDs, with this investment provider.

forex best pairs to trade

Developing qualities such as patience and learning strategies that fit your personality should be top of your list. Central banks tend to raise interest rates when the economy is growing, and cut them to stimulate a struggling economy. This is because a currency’s interest rate is such a big factor in determining its perceived value. Trading hard currencies mean that it is less likely to depreciate suddenly or fluctuate much in value.

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

The value of each pip depends on your lot size and the specific currency that you are trading. Pips can also be useful for calculating the amount of leverage that a trader can use when foreign currency trading. To see a full list of currency pairs that we offer, along with their minimum spreads and margin rates, visit our page on forex trading​​. The United States dollar is the most commonly traded currency in the world, and therefore most major forex pairs include the USD as the base or quote currency. When combined with other currencies from some of the world’s biggest economies, including China, Japan and the United Kingdom, these are seen as major crosses. 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.

  • EUR/USD is a common trade for beginners because there’s usually a lot of information available online about the pair.
  • Major crosses like GBP/USD and USD/JPY will have a tremendous amount of liquidity and volatility, making them perfect to trade for forex traders.
  • Typically, these are the main forex pairs you would be trading on a day-to-day basis.
  • Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years.

This is the rate at which you can buy a currency, and the rate at which you can sell a currency. The price maker gives you a rate at which they are willing to nadex signals buy or sell a currency pair. Swing trading also maximizes your quick profit opportunities by seeking out market swings rather than focusing on the long game.

Traders should keep an eye on the US-China trade war as any developments are likely to affect the price of this currency pair. In turn, expensive oil means that the Canadian dollar will likely strengthen due to the close ties between the Canadian dollar and the price of oil. Since oil is priced in US dollars on the world markets, Canada can earn a large supply of US dollars through its oil exports. As such, if the price of oil rises, it is likely that the value of the Canadian dollar will strengthen compared to the US dollar. On the world market would likely cause a reciprocal slump in the value of the Australian dollar. In the case of the AUD/USD currency pair, this means the US dollar would become stronger, so it would cost fewer US dollars to buy one Australian dollar.

How to become a great currencies trader?

The Australian dollar is the official currency of Australia and the 6th most commonly-traded currency pair. CHF and JPY are 2 of the most popularly traded safe-haven currencies in the world thanks to their low volatility in times of major market movements. In particular, the price of oil has a large amount of influence over the value of the Canadian dollar because Canada’s economy relies heavily on oil exportation. In 2016, oil prices fell to prices not seen in over a decade, and the Canadian dollar also suffered, slumping to an exchange rate of 1.46 CAD to 1 USD. Now you understand a bit more about forex, you’ll have to figure out what forex pairs you want to trade. 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.

forex best pairs to trade

The high trading volume of EUR/USD ensures that this pair has a lot of liquidity, resulting in tight spreads. Liquidity and tight spreads are tempting for traders because they can make large trades even with little impact on the market. Below, we will cover some of the best-traded currency pairs in Forex and the necessary information about them.

Click the ‘Open account’button on our website and proceed to the Personal Area. Once you are done with all the checks, go to the preferred trading platform, and start trading. The main feature of the Canadian dollar is its high dependency on oil prices as Canada is one of the largest oil exporters in the world. The CAD tends to surge when oil prices are rising, and on the opposite, falling oil prices drive the CAD down. By the way, the Canadian dollar is also called ‘loonie’ because of the appearance of a loon on the back of the Canadian dollar coin.

What are currency pairs?

This correlation could be positive or negative – the goal is to confirm the movement of a currency by a corresponding movement of another asset. For instance, if you’re trading the Canadian dollar, you can examine the oil market to determine whether the Canadian dollar gets stronger as oil prices increase. If you find two positively correlated assets poised to move in the same direction, your trade has a higher chance of being profitable.

Because of its strong economic relationship with China, the AUD/USD pairing is great for trading on the fluctuations in the Asian and American markets. This pairing also offers high liquidity, which will attract swing traders who are eager to capture quick profits. Swing trading is also more liable to overnight and weekend market risk, especially in cases where you’re holding a position but unable to monitor price movements.

It covers the major pairs of forex including USD/JPY, EUR/USD, USD/CHF, GBP/USD, AUD/USD, NZD/USD, EUR/CAD, GBP/CAD, and many more. As a general rule, only day trade during hours where the price is moving at least 15 pips or more . For example, daily average volatility at the time of writing is 78 pips per day.

However, USD/CHF still accounts for 3.6% of all daily forex transactions as of 2019. Liquidity is an essential consideration for all traders, particularly those that rely on day trading or swing trading strategies. The more liquid a pair is, the better the bid-ask spreads would generally be. The best currency pairs are those with high liquidity and low volatility, which also have lots of educational materials and signals available for them.

Only you can identify what are the best currency pairs to trade at night that are suitable for your trading strategy. Forex traders look to profit from fluctuations in the exchange rate australian dollar to swedish krona exchange rates of currency pairs. So, if you think that the US dollar is going to strengthen against the Japanese yen, you might buy EUR/USD to capitalize on the move.