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Best Forex Pairs to Trade: Expert Insights and Strategies

best forex pairs to trade
author Written by
Rex John Walsh
author Fact checked by
Sangram Mohanta

Last Updated on June 24, 2024 by TOP FOREX BROKERS REVIEW

The forex market is one of the largest markets globally at present time. It carries out more than 5 million turnovers per day. That’s because there are countless forex pairs and a beginner might not know which forex pairs he should be focusing on. It should be noted that forex trading is basically buying a currency and selling another one. In hopes for more profit in future in case the bought currency’s price increases. The best forex pairs to trade include the EUR/USD, GBP/USD, USD/JPY, AUD/USD, and USD/CAD pairs for the new and the experienced traders.

What Moves Forex Pairs?

It is crucial to remember that not all currency pairs move identically, therefore it is necessary to learn more about what causes forex prices to fluctuate. Rather, it is the strength and health of global economies that affect fluctuations in currency pairs. Specific monthly data such as news and releases that point to an improvement or decline in the economy will make a currency appreciate or depreciate relative to other currencies.

To choose currencies, some factors that should be taken into consideration include; the interest rates within the two countries, the inflation levels, and the political stability of the two countries. Ideally, the trader should consider directing his efforts more toward the leading world economic unions.

The Best Forex Pairs to Trade

The most common currency pair is a collection of some of the best forex pairs to trade in the foreign exchange market. Some of the most important and commonly in use international currency has been as follows : the United State Dollar (USD), The Euro (EUR), The Japanese Yen (JPY), The Great Britain pound sterling (GBP), The Swiss Franc(CHF), Canadian Dollars (CAD) and Australian Dollars (AUD). The major pairs were concluded as being the most volatile of all and were noted to have the least spread.

EUR/USD and USD/JPY

The EUR/USD came out on top as the best forex pair to trade. It involves the two largest economic zones, the Eurozone, and the United States of America as major players. This pair progressed in an upward manner from early 2020 up to the middle of the same year when the United States of America embarked on printing trillions of dollars in stimulus money. Interest rates are a sensitive component to traders and any changes in the relations between these two central banks are observed closely.

USD/JPY is another premier selection because of Japan’s stable economy and being a key exporter in the world. Initially, the Bank of Japan has maintained rates below zero for many years, which has in turn caused the continual depreciation of the Yen. Nevertheless, it is a long-term strategy since Japan has quite stable economic indicators, and risks are minimal here.

Other Good Choices

Here are some other best forex pairs to trade suitable for beginning and advanced forex traders:

- GBP/USD – The British pound sterling is paired with the United States dollar because both economies are relatively stable, and most of their financial information is easily available.

- AUD/USD – This is popular because Australia’s export consists mostly of commodities and the pair is traded against the US dollar.

- USD/CHF – The volume of this pair is high since Switzerland itself is viewed as a country offering greater security for investments.

- EUR/GBP – this is a cross-currency pair that gets a lot of fluctuation from the economic developments and policies that affect the Eurozone and Britain.

Exotic Pairs

‘Forex majors’ are initially tested, and when the trader has had a little practice, he shifts to exotic pairs. These are currencies from emerging economies and they offer more fluctuations and potential for returns. Two such pairs include USD-TRY that deals with the Turkish Lira and USD-MXN that deals with the Mexican Peso.

The USD/TRY pair is often referred to as the Turkish Lira and is yet another exotic currency pair that has become quite popular in the recent past due to the advanced economy of the country as well as the soaring political risk. The Turkish Lira is generally unstable and fluctuates a lot based on political and economic events as well as geopolitical climates.

There is another pair that is becoming popular now and it is the USD/MXN which is the Mexican Peso. Mexico is among the largest and rapidly growing economies in the Latin American region, and has a large emerging and expanding middle income population, which has boosted foreign direct investment and international business activity. But the country also has issues like drug cartels, corruption and political instability which may affect the value of peso.

These exotic pairs should be traded with high risk while having background information on the two currencies involved and the political systems of the two countries involved. It is also helpful to know the right time to enter and exit the market and have trading strategies in place. Also, it is crucial to select a proper broker and to apply certain measures aiming at risk management in order to reduce the minimum possible losses.

Choosing a Forex Broker

Finally, when the currency pairs of choosing have been chosen, the choice of broker is crucial. Thus, to trade with MT5 brokers, you should open an account with a forex broker that is registered in some country and has an international license. The first list of brokers provides access to the major, the minor, and the exotic pairs we’ve mentioned with tighter spreads, superior and faster execution, and the other MT5 trading platforms for analysis.

Bottom Line

Currencies for trading should be those that are paired with influential economies that are relatively stable when a trader begins in forex markets. Allowing beginner traders to get more involved in trading with lower risk is the pairing of major currencies with the greenback, the U.S. dollar which is the strongest currency in the world. For example, if you are a novice trader and have learned a considerable amount about trading, and you wish to make more money then attempting to trade in highly volatile exotic pairs enables you to make more money since they have greater price movements.

As a beginner, it is wise to determine a few leading pairs for instance EUR/USD, AUD/USD, and USD/JPY that you will be familiar with and invest in them rather than attempting to trade all the best forex pairs to trade. When trading it is important to keep abreast with the economic factors behind the currencies to assist you in your analysis once you enter the trading screen. Such knowledge, when put in conjunction with the use of a regulated broker to operate in the most liquid major and exotic forex pairs, equals a recipe for making a lot of profits in the forex market.

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