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Forex Currency Trading - The Best Currency Pairs to Trade in 2021

Name a market that is open every day of the week, has the biggest amount of global trade, and attracts participants from every country on the planet. Yes, you guessed it: the Foreign Exchange Market (Forex), where all transactions are conducted between currency pairings from two distinct countries. Forex currency trading is the term for this. What is the finest forex currency pair to trade? This article will look into the answer to this question in order to assist you in determining which currency pair is suitable for your trading style and preferences.

The well-known slogan "money never sleeps," coined by the well-known Hollywood film "Wall Street," accurately describes the foreign currency exchange industry. From 22:00 GMT on Sundays until 22:00 GMT on Fridays, the Forex market is open for business. As a result, you can trade the Forex market 24 hours a day during the week!

When you're a newbie Forex trader, the sheer amount of currencies and other instruments available to trade through the MetaTrader 5 trading platform might be overwhelming and confusing.

Which currency pairs are the best to trade? The answer is complicated since it differs from trader to trader. You should spend some time analysing different pairings against your personal trading technique to identify which currencies are the best to trade on your own Forex account.

This article will provide you a quick overview of currency pairs and help you choose the best Forex pairs to trade. It will also describe what Forex majors are and whether or not they will be beneficial to you. You won't need to look up Yahoo Finance for Forex currency trading if you have this information.

What Is Forex Currency Trading?

The goal of forex trading, also known as foreign exchange trading, is to buy and sell currencies in pairs. You need to know how much each currency in a pair is worth in respect to each other to be able to purchase and sell currencies successfully. This link is what defines a currency pair. In the "quote" currency, the value of the "base" currency (the first mentioned) is given (the second listed).

An international code is always used to specify the setting of Forex pairs. For example, a quote of EURUSD 1.24 means that one Euro is worth USD$1.24. The Euro (EUR) serves as the base currency, while the US dollar serves as the counter currency. If you'd want to learn more about reading currency pairs, see our article 'Understanding and Reading Forex Quotes,' which delves deeper into the subject.

Currency Futures vs Forex

It's worth noting that in the world of active trading, currency trading is done through the futures or forex markets. I've just discussed Forex currency trading on the Forex market, therefore I'll go through the differences between trading currency futures vs Forex with a currency futures explanation.

Forex futures are a mechanism for investors to trade their views on various countries' economic prowess around the world. Forex futures are contracts that represent the value of a foreign currency in US dollars at a future date. In contrast to trading currencies on the forex markets, Forex futures contracts are priced in US dollars per unit of the foreign currency being traded and have a set expiration date.    

In this article, I'll concentrate on trading currency pairings on the Forex markets.


What Are the Forex Major Pairs?

Do you want to learn how to trade forex online? If that's the case, learning what the major and minor currency pairs are first will be beneficial.

The US dollar is, unsurprisingly, the most dominant and powerful currency in the world, as well as the most commonly traded. The reason for this is the sheer size of the United States' economy, which is the largest in the world. The US dollar is the favoured reference currency in most currency exchange operations around the world, as well as the world's major reserve currency.

When it comes to the main currency pairings, there is no definitive list, but when people talk about the majors, they are usually referring to the pairs that are most commonly traded and thus most liquid. This does not, however, imply that they are the 'best' to trade. The following are some of the most common majors:

  • - EUR/USD (Euro – US Dollar)
  • - USD/JPY (US dollar – Japanese Yen)
  • - GBP/USD (British Pound – US Dollar)
  • - AUD/USD (Australian Dollar – US Dollar)
  • - USD/CHF (US Dollar – Swiss Franc)
  • - USD/CAD (US Dollar – Canadian Dollar)

As trade volumes between the two countries alter every minute, the prices of these main currencies continue to fluctuate in relation to one another. These combinations are naturally connected with countries with more financial power and countries that conduct a large volume of international trade. In general, such pairs are the most volatile, which means that price swings during the day might be the most significant.

Is this to say that they are the greatest to trade with? Traders can either lose or gain money on the volatility, thus this isn't always the case. Although the aforementioned pairs offer the greatest trading circumstances due to their lower spreads, this does not indicate that the majors are the best Forex pairs to trade for every trader.

Are you prepared to begin Forex trading right away? You may trade the Forex market and benefit from tight spreads, quick deposits and withdrawals, and access to the world's most popular platform, MetaTrader 5! 


Which currency pair is the best to trade in Forex?

I'll now provide some Forex currency trading advice to assist you in deciding which currency pairings to trade. There are approximately 200 countries in the world, therefore there are plenty different currencies to trade. These, on the other hand, may not have the highest chance of delivering the best results. So, which currency pair is the best to trade? What do the majority of merchants deal in? Which is the best to trade, and why? Continue reading this article to learn the answers to these and other questions!

Before delving into the top trading pairings, it's a good idea to brush up on the most common currencies found in the world of Forex trading. They are as follows:

  • - US Dollar (USD)
  • - Euro (EUR)
  • - Australian Dollar (AUD)
  • - Swiss Franc (CHF)
  • - Canadian Dollar (CAD)
  • - Japanese Yen (JPY)
  • - British Pound (GBP)

There are a few popular currency combinations among these currencies. If you want to be successful in Forex trading, you must have a thorough grasp of the various Forex pairs you trade. If you choose any of the options discussed below, you will make trading much easier for yourself because they provide a wealth of expert analytical advice and data.

Pair Analysis - Top Forex Pairs to Trade

Let's take a closer look at some of the options when it comes to Forex trading:

EUR/USD : This is the most widely traded currency pair. Furthermore, among modern world Forex brokers, it has the lowest spread. It's linked to fundamental technical analysis. The best thing about the EUR/USD exchange rate is that it is not overly volatile.

As a result, if you're a trader who doesn't enjoy taking too much risk, this could be one of your greatest Forex trading possibilities. Furthermore, due to its popularity, you can obtain a wealth of information about the EUR/USD on the internet, which can help you avoid making costly mistakes.


GBP/USD:  Profitable pips and the possibility of significant leaps have aided the popularity of the GBP/USD. You should keep in mind, however, that higher gains come with a higher risk. This is a pair of currencies that can be classified as volatile. Many Forex traders, on the other hand, prefer to use this as their preferred trading strategy because they can obtain lots of market analysis material online to assist them.

USD/JPY:  This is another another popular currency pair that can be seen in the realm of Forex trading on a regular basis. It has minimal spreads and, in comparison to other pairings, you can usually observe a smooth movement. It also has the potential to give traders with exciting and profitable opportunities.

All of the major Forex brokers that can be discovered have narrow spreads. However, due to its volatility, the GBP/USD does not fall within this group. It's probably wise to avoid couples who have large spreads. Trading experts usually propose a spread of 0-3 pips. Trading may become overly expensive when it exceeds 6 pips, resulting in higher losses.

However, this does not mean you should completely avoid anything with a large spread. In this sense, the greatest method to trade wisely and effectively is to use adequate risk management in your trading to assist reduce the dangers of trading.

Minor and Exotic Forex Pairs

The major Forex pairs, as we've seen, are made up of the most actively traded currencies, and they all include the US dollar. Minor Forex pairs, often known as cross currency pairs, don't involve the US dollar. Despite having higher spreads and less liquidity than the leading pairs, some pairings have sufficient liquidity to trade. The following minor pairs are included:

  • - EUR/GBP
  • - GBP/JPY
  • - EUR/CHF

The exotic currency pairs, which include currencies from emerging economies, are then there. Exotic pairs are the least liquid, and their spreads are the widest. These are some examples of unusual pairings:

  • - USD/CLP - US dollar/Chilean Peso
  • - EUR/RUB - Euro/Russian Rouble
  • - GBP/SGD - British pound/Singapore dollar

If you're interested in trading these currencies but aren't ready to risk your funds yet on the live market, there's no better place to start than with a FREE demo trading account.

Traders will be pleased to know that they can trade completely risk-free with a FREE demo trading account. Instead of heading straight to the live markets and putting your capital at risk, you can avoid the risk altogether and simply practice until you are ready to transition to live trading. Take control of your trading experience.

Technical and Fundamental Analysis

Trading, like any other talent, requires time and a great deal of effort to master. To master this skill, you'll need a lot of patience, discipline, and, most importantly, a passion for the industry. Trading success begins with a trading strategy based on either technical or fundamental analysis.

Technical analysis examines a financial instrument's price charts and uses technical indicators or price activity to forecast future price changes.

Fundamental analysis, on the other hand, tries to predict price changes using macroeconomic data and news releases.

You may learn currency trading in a variety of ways on the internet because there are numerous educational institutions.

When is the Best Time to Trade?

It's time to go over the Forex trading sessions and the currency pairings I just mentioned in more depth. Understanding the different trading sessions in Forex will help you improve your trading strategy.

Except on weekends and holidays, the Forex markets are open 24 hours a day during the week. However, no single market dominates the market. Instead, there is a global network of brokers, exchanges, and brokers in every country. The Forex trading hours are determined by each participating country's market opening hours.

The following are the four major trading sessions:

  • - London (08:00 - 17:00 GMT)
  • - New York (13:00 - 22:00 GMT)
  • - Sydney (22:00 - 07:00 GMT)
  • - Tokyo (00:00 - 09:00 GMT)

Although a 24-hour Forex market provides many advantages for both individual and institutional traders, because it ensures liquidity and the ability to initiate and exit deals at any moment throughout Forex trading hours, it also has its drawbacks. While you can trade other currencies whenever you want, you can't keep track of your position for too long.

This implies that there are occasions when traders lose out on opportunities, or, even worse, when market volatility spikes, causing the spot to move against a position while you're not nearby. To mitigate such risks, traders must first identify when markets are most likely to be volatile, and then choose which times are optimal for their particular trading technique and style.

If you look at these hours, you'll note that there's a pattern: as one big Forex market shuts, another opens. The markets are more active at certain periods of the day and less active at other times of the day.

Throughout the trading sessions, all traders must maintain track of the various levels of activity. Following that, I'll go over these periods in more detail, as well as the times that traders perceive to be the greatest and worst times to trade.

Worst Times to Trade :
There is a significant risk of trading when there is minimal liquidity, which normally occurs when markets open and around 12 a.m. Low liquidity can lead to increased volatility than seen during regular trading hours. Between the hours of 12 a.m. and 2 a.m., professional traders advise against trading. These high-risk times can jeopardise your account.

Best Times to Trade :
In terms of momentum, trend, and retracement, professional traders consider the first three hours of a huge trading session to be the best. Traders appear to discover the best opportunities during these hours. The TOTH (Top Of The Hour), which is the beginning and final five minutes of each hour, may also be volatile and have sharp market movements.

The Importance of a Reliable Trading Platform

Many elements, such as having a well-written trading plan and sticking to it, can make or break you as a trader. This demonstrates that you are aware of your entry and exit points as well as what you are looking for. Trading is a lot of psychology and can be difficult to manage if you don't have a plan in place. The goal is to keep our emotions from having a psychological impact on our performance.

Apart from the psychological aspect, having a trustworthy broker and platform is critical. MetaTrader trading platforms are widely regarded as among the best Forex trading platforms on the market. These platforms are the most popular in the globe, and they include a variety of technical indicators to aid chart analysis.

Risk management is so critical in trading, and it's practically impossible to compute the optimum lot size because every pair has a distinct pip value, a trading calculator can be extremely useful.

Conclusion

Generally speaking, the best pair to trade is the one with which you are most familiar. Our currency exchange rate Forex trading calendar, where you can also get predictions and forecasts about announcements, is a great method to keep track of economic developments that might affect the value of a currency.

You may obtain forecasts about prospective currency-related events that may influence the Forex markets using a Forex trading calendar.

The mechanics of Forex trading are an enthralling subject to study. As globalisation becomes a more significant concern for most countries, the fate of their currencies becomes increasingly intertwined. Make sure you thoroughly investigate the foreign currency market before you invest.

There are numerous Forex pairings accessible for trading, and it is highly recommended that you trade the majority of them before settling on one. Because Forex trading is dangerous, you should practise on a Demo account using virtual currency before risking your own money.

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