AtoZForex – Normally, choosing the top Forex currency pairs to trade is not a walkover, as some traders might see at first glance. You have to think of the main factors that affect currency pairs, according to your experience in trading. These factors include volatility, speed, trading strategies, and the level of difficulty of foreseeing the course.
Also, currency pairs have a huge variety for trading in the Forex market, but most of the traders ignore the other instruments. Hence, traders open positions only on EUR/USD and GBP/USD which are the most traded currency pairs worldwide. But if you look deeper into them, you would find a large number of popular currencies that you can trade in Forex.
What are the Top Forex Currency Pairs?
First, you need to be aware of the most traded currency pairs to be able to choose your trades. The most traded pairs include EUR/USD, USD/JPY, GBP/USD, AUD/USD, NZD/USD, USD/CHF, USD/CAD. These currency pairs account for more than 70 % of the total turnover of the Forex market. Additionally, the most traded currency pairs can be identified with the highest liquidity of transactions, global popularity, and a huge number of players. I will guide you through the list of Top Forex Currency Pairs.
The EUR/USD is one of the most predictable currency pairs of Forex, as the price dynamics can be foreseen using technical analysis indicators. Also, there is the availability of liquid derivatives on EUR/USD. Hence, it allows you to trade on the EUR/USD not only in the spot market, but also to use derivatives such as futures, options, and CFDs.
The US Dollar and the Japanese Yen (USD/JPY) is one of the top three most liquid instruments in Forex. Additionally, it is the top currency of the Asian trading session and it acts as a worthy competitor to the EUR/USD.
Also, the USD/JPY is the second level of liquidity in the Forex market and it accounts for 17% of transactions on the foreign exchange market. Moreover, the pair Dollar/Yen has hit volatility as it is in the top three of the most volatile instruments in the international currency market. Hence, new traders should avoid trading USD/JPY pair. Additionally, it has a wide range of fluctuations in the share price, which provides good opportunities for experienced traders.
The British pound/ US dollar pair or so-called cable is at the third level of liquidity Forex instrument. This is due to the fact that its operations account for about 12% of the total trading volume on the foreign exchange market. This pair is known for its high volatility and instability in price. Therefore, it has the place in the list of the most traded currency pairs among professional traders. Specifically, traders, who focus on short-term aggressive strategies, favor cable a lot.
4. AUD/USD and USD/CAD
The AUD/USD and the USD/CAD currency pairs have much less liquidity. Also, traders call these pairs as commodity currency pairs. The Australian dollar and Canadian Dollar have a direct correlation between gold and oil prices.
Additionally, since Australia is a large producer of gold, the price of AUD/USD always depends on gold prices. Similarly, as Canada is one of the largest oil producers worldwide, the price of USD/CAD is highly correlated with oil prices.
Recommended currency pairs for Beginners and Experienced traders
To sum up, beginners should start trading with the following pairs:
Also, new traders should avoid trading many currency pairs simultaneously. Thus, it is better to specialize in one or two instruments at a time. Specialization is likely to give much better results.
As for experienced traders, it is best to trade EUR/USD, GBP/USD, NZD/USD, AUD/USD, USD/JPY, EUR/JPY, GBP/JPY, AUD/JPY, USD/CHF, XAU/USD.
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