Forex Pairs: What Is The Best Currency Pair To Trade?
Currency trading always involves forex pairs. The two currencies involved in your trade is the pair. If you are trading US dollars for Swiss francs, for example, the currency pair is USD/CHF.
In practice most foreign exchange trading is limited to the currencies of the larger finanical powers though theoretically, you could trade any two currencies of the world. This does not necessarily mean the most politically powerful or biggest countries. For example, Switzerland is only a small country but is a major player in the financial markets because of the global importance of the Swiss banks.
90% of the funds traded on the forex markets are accounted for by 6 major forex pairs. These are:
- USD/EUR: the US dollar and the euro
- the British pound and US dollar, nicknamed Cable because it used to be synchronized on both sides of the Atlantic by a cable running under the ocean: GBP/USD
- USD/JPY: the US dollar and Japanese yen.
- CHF/USD: the Swiss franc and the US dollar.
- USD/AUD: the US dollar and the Australian dollar.
- USD/CAD: the US dollar and Canadian dollar.
It is best to stick with the major forex pairs in the beginning. But traders do get involved in other combinations of these major currencies that include other countries such as the New Zealand dollar.
According to a 2007 study, the US dollar is the most significan single currency and is involved in 85% of trades. The euro is second at 37%. Next come the yen, pound, Swiss franc, AUD and CAD in that order. Because there are always two currencies in every trade, these add up to more than 100%
What Is The Best Currency Pair For A Beginner?
Because there is a lot of information about the EUR/USD pair and the high liquidity results in a smaller spread, most experts advise starting out in forex with this pair so your costs will be lower.
Some of the other currencies have particular characteristics which make most newbies avoid them unless they have special knowledge. For example the value of the Canadian dollar is strongly influenced by the price of oil because Canada is an oil exporter. The Japanese yen can also be affected by the price of oil in the opposite direction because Japan is a large consumer and importer of oil.
You will not want to get involved in a lot of different currencies when you are starting out. The best thing to do is probably to take the EUR/USD market and stay with that for the first few months at least. GBP/USD would be the second choice of the major forex pairs for most new traders. - 23208
In practice most foreign exchange trading is limited to the currencies of the larger finanical powers though theoretically, you could trade any two currencies of the world. This does not necessarily mean the most politically powerful or biggest countries. For example, Switzerland is only a small country but is a major player in the financial markets because of the global importance of the Swiss banks.
90% of the funds traded on the forex markets are accounted for by 6 major forex pairs. These are:
- USD/EUR: the US dollar and the euro
- the British pound and US dollar, nicknamed Cable because it used to be synchronized on both sides of the Atlantic by a cable running under the ocean: GBP/USD
- USD/JPY: the US dollar and Japanese yen.
- CHF/USD: the Swiss franc and the US dollar.
- USD/AUD: the US dollar and the Australian dollar.
- USD/CAD: the US dollar and Canadian dollar.
It is best to stick with the major forex pairs in the beginning. But traders do get involved in other combinations of these major currencies that include other countries such as the New Zealand dollar.
According to a 2007 study, the US dollar is the most significan single currency and is involved in 85% of trades. The euro is second at 37%. Next come the yen, pound, Swiss franc, AUD and CAD in that order. Because there are always two currencies in every trade, these add up to more than 100%
What Is The Best Currency Pair For A Beginner?
Because there is a lot of information about the EUR/USD pair and the high liquidity results in a smaller spread, most experts advise starting out in forex with this pair so your costs will be lower.
Some of the other currencies have particular characteristics which make most newbies avoid them unless they have special knowledge. For example the value of the Canadian dollar is strongly influenced by the price of oil because Canada is an oil exporter. The Japanese yen can also be affected by the price of oil in the opposite direction because Japan is a large consumer and importer of oil.
You will not want to get involved in a lot of different currencies when you are starting out. The best thing to do is probably to take the EUR/USD market and stay with that for the first few months at least. GBP/USD would be the second choice of the major forex pairs for most new traders. - 23208
About the Author:
Author, T. O'Reilly has worked at forex trading for the past two years and is up to $363 every day. Learn how you can tooforex pairs. Visit http://daytradingthecurrencymarket.com
posted by X - Men @ 4:54 AM
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