Does this mean that they are the best ones to trade? Not necessarily, as traders can either lose, or make money on the fluctuations. The aforementioned pairs tend to have the best trading conditions, as their spreads tend to be lower, yet this still does not necessarily mean that the majors are the best Forex pairs to trade for every trader. Are you ready to start Forex trading already? Click the banner below to get started:. I'll now give you some Forex currency trading tips to help you decide which currency pairs to trade.
With over countries in the world, you can find more than a handful of currencies to trade. However, these may not have the potential to deliver the best results. So, what is the best currency pair to trade? What do most traders trade? Which is worth trading and why?
Keep on reading this article to find out the answers to these questions and more! Before analysing the best trading pairs, it is better to enhance our knowledge of the most popular currencies that can be found in the world of Forex trading. They include:. Out of these currencies, you can find a few popular currency pairs.
If you want to achieve success in Forex trading, you need to have an in-depth understanding of the different Forex pairs that you use to trade. If you select any of the options which we are going to discuss below, you will make trading much simpler for yourself, as lots of expert analytical advice and data is available on them. Therefore, if you are a trader who does not like being in the position of taking too much risk, this might be one of your best options for trading Forex.
All the Forex majors that can be found are equipped with tight spreads. It is perhaps better to avoid those pairs which have high spreads. The recommended spread by the trading experts tends to be around pips. When it exceeds 6 pips, trading may become too expensive, which can lead to greater losses. Still, it doesn't mean that you should totally avoid anything which has a high spread. The best way to trade sensibly and effectively in this regard would be to exercise proper risk management within your trading to help minimise the risks of trading.
As we saw above, the major Forex pairs consist of the most heavily traded currencies and all include the US dollar. Minor Forex pairs, also known as cross currency pairs, are pairs that do not include the US dollar.
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These pairs have wider spreads and less liquidity than the major pairs, however, they still have sufficient liquidity for trading. Examples of minor pairs include:. Then there are the exotic currency pairs, which include the currencies from emerging economies.
- What is Forex volatility??
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Exotic pairs are the least liquid and also tend to have the largest spreads. Examples of these exotic pairs include:.
Just like any other skill, becoming successful at trading takes time and plenty of practice. To master this skill you need to have a lot of patience, discipline, but most of all you need to be passionate about the industry. Successful trading starts with having a trading plan that is based on either Technical or Fundamental analysis.
Technical analysis looks at price charts of a financial instrument, using technical indicators or price action to attempt to predict future movements in price. Whereas, fundamental analysis attempts to predict price movements based on macro economical data and news releases. There are many different ways you can learn currency trading online as there are a lot of different education providers. To start learning for free with Admiral Markets we suggest heading over to our "Forex Strategy" section in our Articles and Tutorials education portal to learn different trading strategies.
It's time to briefly detail the Forex trading sessions along with the currency pairs I have just discussed. Understanding the Forex trading sessions will also strengthen your trading strategy. The Forex markets are open 24 hours a day during the week, except on holidays. However, the market isn't dominated by one market. Instead, there is a global network of brokers and exchanges and brokers around the world.
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The Forex trading hours are based on the market opening hours of each participating country. Although a hour Forex market offers many opportunities for both individual and institutional traders , since it guarantees liquidity and a reliable opportunity to enter and exit trades at any possible time within the Forex trading hours, it still has its pitfalls for traders.
While you can trade different currencies anytime you wish, you can't monitor your position for long periods of time. This means that there are Forex trading times in which traders miss opportunities, or worse, there is a spike in market volatility that leads the spot to move against a position when you're not nearby. So far, this is an explanation of picking trade entries which focuses upon the price at and just before the time of entry, but there is a wider context to consider.
The currency pair that is showing the highest volatility today is likely to be the biggest mover tomorrow, so it might be a wise idea to put your focus there at the start of the next trading day. Also, how about using volatility to decide whether to take what looks like being a good trade entry? For example, if the day Average True Range is pips, and the price was 1. However, on a few occasions it will go much further, but the best trades will usually be the ones which set up before the average range is made.
The good news is that average pip movement can be used in several ways to optimize your trade exits , as well as your trade entries. The most common exit method using volatility is used by day traders, who might keep an eye on the Average True Range indicator on a daily chart applied to whatever they are trading.
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They often look to exit when the pip movement made for the day is approximately equal to the ATR This can be a great method for day traders, especially when the volatility value is close to the location of major support and resistance and maybe a round number as well. However, there is a common pitfall here. What is usually not understood is that most days, the pip movement does not equal its average pip movement — but on the days when traders can really make a lot of money, the price will exceed that value! The problem is that you will get a few days where the price just keeps going and going, and by letting these winners run, you can make your trading more profitable.
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If the price action starts to go flat and you see short-term volatility decreasing, this would suggest that the trade does not have any more profit left in it, at least over the short-term. Alternatively, if the price just keeps going in your direction like a train, stay in the trade and expect a day of abnormally large pip movement to play out.
Finally, if you are in trade and the price is moving in your favor, and then it starts to move against you with much larger candlestick pip ranges than the advance was showing, it is usually a good signal that it is time to get out of the trade, at least over the short-term, because it is probably going to move even further against you.
Average pip movement is a very useful but often overlooked tool that can be applied easily using the Average True Range Indicator. It can be used to determine:. Measuring your winnings on a daily basis is a big mistake in Forex trading, as market conditions fluctuate frequently. Ask instead how many pips you can make in a month or in a year. Averaging pips per month is not an impossible achievement. Adam trades Forex, stocks and other instruments in his own account. When a central bank increases its overnight interest rate it causes increased demand for that currency because investors and traders seek the higher yield which in turn appreciates the currency relative to other currencies.
Important economic data that influences currency rates include CPI inflation data, Nonfarm payrolls employment data , gross domestic product GDP , retails sales, purchasing managers index PMI and others. Politics - Trade wars , elections, corruption scandals and changes in policies introduce instability which reflects in the forex market.
Volatility Charts
Volatility - Traders usually take smaller positions on the more volatile currencies and bigger positions on less volatile positions. Volatility can strike any of these pairs at any time due to abrupt changes in interest rates, drastic changes to the economic outlook, or political instability. It is important to follow these markets dedicated pages above for up to date news and analysis.