Top 10 Forex pairs to trade and NEVER trade!


Forex market is the largest and most volatile market in the world with hundreds of currency pairs to trade. To simplify things, here we study the list of top 10 forex pairs to trade.

Free Forex Education – Forex is the only market that never closes during the working week, the only exclusion is the Crypto Exchanges which are open all year long. Forex is everywhere in our lives, it has the largest trading volume among the financial markets. While only the big bank traders used to be able to trade the Forex market, nowadays everyone can trade Forex. This market reflects the financial dynamics of world trade very clearly.

When you trade Forex, you trade with currency pairs from two different countries. The Forex market stays open from 5 pm EST on Sunday to 4 pm EST on Friday every week and it is open for 24 hours a day during trading days.

If you are new in this market, you might feel a little confused with so many trading instruments to trade. Often you will find hundreds of currency pairs on your MetaTrader 4 or MetaTrader 5 trading terminal. So, with so many trading pairs what are the best Forex pairs to trade? The answer to this question often depends on you as a trader. You need to take your time to understand what kind of a trader you are. Once you identify your strengths and weaknesses you will analyze the market. You will need to look into the list of Forex pairs compatible with your trading strategy, to determine the best pairs to trade. You can also use our Currency Correlation Matrix below to use more than one pair in your strategy.

Types of Forex Pairs to Trade

Broadly speaking, we can separate Forex pairs into three categories:

  • Majors (Major Forex Currency pairs)
  • Minors (Minors Forex Currency pairs)
  • Exotics (Exotic Forex Currency pairs)

What are major Forex currency pairs?

Major Forex pairs are the most traded pairs of the Forex market. Some traders may disagree on the exact list of Majors forex pairs due to the change in liquidity in recent years. Overall speaking Major Currency pairs are EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, NZD/USD and USD/CAD.

These currency pairs consume as much as 85% of the Forex Market Liquidity.

What are minor Forex pairs?

A currency pair without the US dollar inside is called a minor currency pair. Minor Currency pairs are not linked with the US Dollar but include the Euro, Pound, and Yen, which are the three most traded currencies besides the USD.

Minor Forex pairs have a smaller market share compared to major pairs as they can exhibit lower market liquidity. There are many minor pairs. Here is the list of the most traded minor Forex currency pairs from 10 of the top Forex brokers we have spoken to:

  • EUR/CHF – Euro/Swiss franc
  • EUR/GBP – Euro/British pound
  • GBP/AUD – British pound/Australian dollar
  • EUR/JPY – Euro/Japanese yen
  • EUR/NZD – Euro/New Zealand dollar
  • EUR/AUD – Euro/Australian dollar
  • EUR/CAD – Euro/Canadian dollar
  • CHF/JPY – Swiss franc/Japanese yen
  • GBP/JPY – British pound/Japanese yen
  • AUD/JPY – Australian dollar/Japanese yen
  • NZD/JPY – New Zealand dollar/Japanese yen
  • GBP/CHF – British pound/Swiss franc
  • CAD/JPY – Canadian dollar/Japanese yen
  • GBP/CAD – British pound/Canadian dollar

What are exotic forex pairs?

An exotic Forex pair is a combination of a major currency and the currency of a developing economy. Exotic Forex currency pairs have less volume compared to the major and minor currency pairs. As a result, the spreads can be higher when trading them. In the meantime, volatility in these pairs can be much higher than Majors and Minors. There are certain MT4 indicators for exotic pairs only.

We spoke to a few brokers such as HYCM and Plus500 asking the following questions:

– Which exotic pairs traders generally prefer to trade?

  • EUR/TRY- Euro/Turkish lira
  • USD/HKD- US dollar/Hong Kong dollar
  • JPY/NOK- Japanese yen/Norwegian krone
  • NZD/SGD- New Zealand dollar/Singapore dollar
  • GBP/ZAR- British pound/South African rand
  • AUD/MXN- Australian dollar/Mexican peso

– Which of the Exotic pairs traders make the biggest loss in general?

  • GBP/TRY- British Pound/Turkish lira
  • GBP/MXN- British Pound/Mexican peso
  • AUD/HKD- Australian dollar/Hong Kong dollar

List of 10 Best Forex Pairs to Trade

There are around 200 nations in the world. Most of these countries have their own currencies. While most of the countries allow Forex trading, some have strict regulations and some countries have banned Forex trading. Additionally, religion plays a strong role too. There is still a big debate on whether Forex trading is Halal or Haram?

From the currency pairs perspective, not all currencies are worth trading. Let’s go with our list of 10 best Forex pairs to trade.

Here is the list of the most popular currencies in the world. These are also the world’s strongest currencies.

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

When you combine these currencies with the US dollar, you pretty much get the list of the best Forex currency pairs to trade.

#1 EURUSD

EURUSD is the most traded currency pair of the Forex market. Over 24.0% of the daily Forex volume derives from EURUSD trades. This pair is very popular among the traders since it connects the world’s two biggest economies:

  • Euro representing the European economy;
  • USD representing the US economy.

Since EURUSD volume and demand is high, the spread for this pair is often very low. Traders enjoy a smaller charge with sufficient liquidity and tight spreads.

Several fundamental factors determine the EURUSD exchange rate. Here is the list of the most important fundamental events for EURUSD traders:

  • The interest rates set by the European Central Bank;
  • US Federal Reserve interest rate announcements;
  • NFP figures announcements;

The currency with a higher interest rate often creates a higher demand. But nowadays almost all of the central banks are rallying towards negative interest rates. The US FED so far is the only exception. As a result, USD has been strengthening in the recent past.

#2 GBPUSD

Brexit has shaken the GBPUSD market significantly. However, this pair is still the second most popular currency pair of the world.

Why is GBPUSD called cable?

Often you will find traders calling GBPUSD as ‘cable’. The term “Cable” comes from telegraph days. Before the introduction of the Euro, GBPUSD was the most traded currency pair. Back then traders would telegraph the bid and ask quotes between London and New York. Since then trades call GBPUSD as “cable”.

In 2019, this pair made up more than 9% of the total daily Forex transactions.

Like other currency pairs, the strength of GBPUSD comes from the strength of the British and American economies. If the British economy grows faster than America, it is likely that the pound will be stronger against the Dollar. However, any better results from the American economy may reverse the scenario. Since the Brexit uncertainty has shaken the British economy, GBP has depreciated against USD in the past couple of years.

Just like EURUSD,  GBPUSD is affected by interest rates announcements from the Bank of England (BoE) and the FED. The subsequent difference between the interest rates on the Pound and the Dollar can have a great impact on the price of the GBPUSD pair. At the moment Brexit updates also have a significant effect on GBPUSD volatility too.

#3 USDJPY

USDJPY pair is also known as ‘the gopher’.  USDJPY is one of the most-traded Forex pairs on the market, which represents approximately 13% of all daily Forex transactions in 2019.

Did you know? Japanese rice traders were the first people to use candlesticks.

Like EURUSD, traders also like USDJPY due to its strong liquidity. Japanese yen is the most traded currency in Asia and the US dollar is the most common currency in the world. Thus, USDJPY spread is often the lowest in the Forex market.

The Fed, BOE, and ECB, the Bank of Japan set the interest rates for the Japanese economy are the main fundamental market drivers.

Currency Market Correlation Matrix

USDJPY often has a negative correlation with EURUSD and GBPJPY.

#4 AUDUSD

Trades often call AUDUSD as  ‘Aussie’. This pair represents the Australian dollar against the US dollar. In 2018 AUDUSD volume was 5% of the global Forex volumes. Since Australia is an export country, AUD as a currency fluctuates with the commodities, such as iron ore and coal.

Falling commodity prices will often put AUD under pressure. Therefore, AUDUSD falls into the commodity currencies category too.

Like previously mentioned currency pairs, the AUDUSD exchange rate is also affected by the interest rate decisions between the Reserve Bank of Australia (RBA) and the FED. If American interest rates are low, USD will weaken against AUD, and the AUDUSD price may go up. 

#5 USDCAD

USDCAD is another commodity currency. Traders often call USDCAD as the ‘loonie’ on account of the loon bird that appears on Canadian dollar coins.

The USDCAD transactions make approximately 4% of the daily Forex trades. Canada is a major Crude Oil exporter. Hence, the strength of the USDCAD pair links to the price of oil.

Since oil is priced in US dollars, Canada can earn a large supply of US dollars through its crude oil exports. As such, with the increase of oil prices, the Canadian dollar will strengthen against the US dollar.

In a general rule, the US dollar weakens when the price of oil increases.  Therefore, if the dollar weakens, more US dollars will convert into other currencies to buy the same amount of oil. However, expensive oil means that the Canadian dollar may strengthen due to the close ties between the Oil price and the Canadian dollar. Moreover, traders should keep an eye on both Brent crude and US crude when trading USDCAD currency pair.

#6 USDCHF

USDCHF is the 6th most popular forex pair on our list. CHF stands for Swiss Franc, the national currency of  Switzerland. This pair is popular for the Swiss financial system, which is a safe haven for investors and traders.

The Swiss franc is a safe haven asset. Therefore, the Swiss franc will see less interest from traders in case of any global financial crisis. With the increase of volatility, the price of this pair would drop as CHF strengthens after experiencing increased investment. USDCHF accounts for approximately 3% of the global Forex transactions.

#7 EURGBP

EURGBP is the first Minor Forex Currency pair that makes it to our list of top 10 most traded forex pairs. Many traders will often lose money trading EURUSD. This is because of the historic link given in the proximity of the UK to Europe.

Despite the difficulties in EURGBP technical analysis, this pair makes 2% of the global Forex transactions every year. Like the other currency pairs, traders should keep eyes on any ECB and BoE announcements which would increase volatility further.

In recent years, the fluctuation in this currency pair has become unpredictable due to the uncertainty surrounding BREXIT. However, the high level of volatility may attract traders, but it has an adverse impact on a risk management strategy.

#8 AUDJPY

AUDJPY is another minor pair making to our top 10 list. This cross pair has its main volatility during the Asian session.

Japan is an export-based economy, while Australia is a commodity-based economy. Global uncertainty and any volatility in the commodities put an impact on the AUDJPY pair. Like other currencies, any interest rate decisions from RBA or BOJ put an impact on the AUDJPY price.

AUDJPY is a hard Forex pair to trade, however, once you master your trading strategy, you will find synergies.

#9 NZDUSD

Many traders love NZDUSD. Statistically, NZDUSD is the most trader friendly currency pair.

The economy of New Zealand mostly depends on dairy products. Therefore, the NZDUSD price moves with the price change in the global dairy industry. Price rise in the dairy industry will bring bullish sentiment to the NZDUSD price. On the other hand, a decrease in Dairy products price sets bearish sentiment.

#10 GBPJPY

In 2018 GBPJPY was the most predictable currency pair according to the AtoZMarkets trader survey.

This pair is one of the most volatile Forex pairs. Almost any global news will move the GBPJPY price. Many long term traders favor this pair as it moves with long legs with lots of pips. However, small traders with small investments may struggle to make a profit from this pair. This pair is also one of the best scalper friendly minor forex currency pairs too.

Conclusion

The dynamics of foreign exchange trading is very interesting, and it can provide a boost to the global economy. However, since is highly volatile you should never invest any funds that are vital for your livelihood. You should only trade with brokers that you trust, and trade live after you test your strategy with demo accounts.

Meanwhile, according to our broker interviews, USDRON and USDBGN pairs are the least favourite currency pairs in the Forex market.

What do you think about the best Forex pairs to trade? Let us know in the comment section below.

  1. Your article has a graph with positive and negative colored squares. Would you please explain how to read it. Thank you, Douglas

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