Best Currency Pairs to Trade in Forex? 2023

What this means is that the first two currency pairs often move in the same direction, but the last two move in opposite directions to each other. The EURUSD currency pair has the European Euro as its base currency and the United States dollar as the currency. These two currencies are strong on their own, with the backing of powerful economies. GBP/USD, commonly referred to as ‘cable,’ has always enjoyed significant popularity. An experienced media professional, John has close to a decade of editorial experience with a background that includes key leadership roles at global newsroom outlets. Choose your desired trade size, and open a long position by clicking buy on a given currency, or open a short position by clicking sell.

If traders can gain an understanding of the market hours and set appropriate goals, they will have a much stronger chance of realizing profits within a workable schedule. Take caution when trading this pair, however, as its volatility is a double-edged sword. You could make as much as 100 pips in a day or lose just as much in the same period of time.

Discover the 10 most traded currency pairs in the world and how you can start trading them. It is true that a certain degree of volatility is required in order to profit in the forex market. This is why many traders prefer to trade major currency pairs (EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, GBP/JPY, and USD/CAD). This group of currencies is highly liquid and, as a result, unlikely to experience significant unexpected price moves. Some minor currency pairs can become a good alternative (NZD/USD, EUR/CHF).

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This means that the price does not jump from one position to a ridiculously high or low in a blink of an eye. In other words, your risk exposure is kept at a reasonably low-level. Some negative political factors tend to affect the value of the Yen as well. But the Japanese economy is very robust, causing the currency to always bounce back. More recently, the leading factor to monitor when trading the USD/CNY pair is US-China tensions, which have flared up for a number of reasons over the years. For example, in August 2022, US House Speaker Nancy Pelosi visited Taiwan, which caused Beijing to suspend US-China climate talks and cut off high-level military communication channels.

Furthermore, the volatility must cause price changes over a short time span, preferably between days and weeks. The best environment for swing traders is when a market gets stuck in a range, with obvious areas of resistance and support. A range can often develop once a trend has run out of steam, and a period of consolidation takes place.

Why Do Many of the Top Currency Pairs Include the USD?

Even if your forex broker does not have a minimum deposit requirement, you’ll still need a method for funding your account to place live forex trades. PayPal has become a popular way for forex traders to fund their trading accounts, due to PayPal’s extensive international presence and wide range of supported currencies. Check out our guide to the best PayPal forex brokers to learn more about using PayPal to fund your account, and to see our list of the best forex brokers that accept PayPal.

The forex market is the largest global market, with nearly $7.5 trillion in currency traded on average per day. Stay abreast of major market news and track the movements of your chosen currency pairs. When the price and market movements indicate a buy or sell, get ready to put in your trade.

Best & Most Profitable Forex Pairs to Trad in 2023 – Beginners Guide

For starters, it is relatively liquid – though there is an ongoing debate over whether it ought to be considered a ‘major’ or ‘minor’ currency pair. Secondly, it is massively popular, is relatively https://1investing.in/ stable, is accessible, and attracts competitive spreads. All these, plus the predictability of its price, make NZD/USD one of the best trading pairs for intermediate to experienced investors.

• Like the Fed and ECB, the Bank of Japan (BoJ) sets interest rates for the Japanese economy, impacting the yen’s value against the US dollar.
• Interactive Brokers has significantly expanded its scope of educational content for beginners in recent years.
• It is the amount you would pay in one currency for a unit of another currency.
• Also known as ‘Aussie,’ the AUD/USD joins our list of best currency pairs with tight spreads.

The AUDUSD exchange rate is also influenced by interest rate changes from the Reserve Bank of Australia (RBA) and the US Federal Reserve. It can also be affected by gold prices, as Australia is a major producer of gold. GBPUSD, or ‘cable,’ is a measure of the relative strength of the British and American call loan meaning economies. If the UK economy grows more rapidly relative to the US, the pound would be expected to gain value against the US dollar and vice versa. The quotation price of GBPUSD is also influenced by the respective interest rates set by the Bank of England (BoE) and the Federal Reserve (Fed).

What are forex pairs?

The United States, Australia, Canada, Europe, New Zealand, Japan and Switzerland are financially powerful countries with high global trade volumes. The major currencies have good liquidity and volatility, two things needed to trade Forex. But the major currencies aren’t all suitable for Forex beginners, as we will explore later in the article. The U.S. dollar dominates the top 7 currency pairs purely because the United States has the largest global economy, and the dollar is the dominant reserve currency for the world. Therefore, all of the major Forex currency pairs include the dollar.

Forex is the most liquid financial market with over $6.6 trillion traded 24 hours a day for five days a week. The opportunities to make money from trading Forex are never-ending. Also, these currency pairs aren’t necessarily the easiest pairs to trade. EUR/USD, often referred to as the ‘fibre’, is widely recognized as the most popular forex pair due to its high trading volume and tight spreads.

The Yen is often used by carry traders who borrow the Yen and invest it into higher yielding currencies. The Bank of Japan has had to combat low inflation and growth for many years, and as a result it has a very low interest rate. The EUR/GBP is a perfect example of a lack of price stability, showing you when not to trade Forex. If you look at a chart and trade potential isn’t immediately apparent, move on to another chart. Pick any of the top 10 popular Forex currency charts, and you will find a trade ready or almost ready to enter the market.

• The currency pairs in this article are the best currency pairs to trade across the board.
• An experienced media professional, John has close to a decade of editorial experience with a background that includes key leadership roles at global newsroom outlets.
• The popularity of the EUR/USD ensures that it trades at tight spreads.
• For starters, it is relatively liquid – though there is an ongoing debate over whether it ought to be considered a ‘major’ or ‘minor’ currency pair.
• Trading USD/JPY allows traders to capitalize on these regular fluctuations if they can identify opportune moments to buy and sell.

The Reserve Bank of Australia (RBA) also has major influence over the AUD/USD. As the price fell, it tested support at $85.80 (which was previous resistance). It landed on another support zone which coincided with the 200 EMA (Red wiggly line). But, it is great to add it here because it’s a fabulous example of when NOT to trade. Either of these setups is a high probability, especially on the daily chart.

EUR/USD has volatility, but not so much as to create price spikes. Compare this chart with the AUD/USD chart above so you can ascertain what makes a high probability trade setup in Forex and when you shouldn’t trade a currency pair. AUD/USD is an excellent currency to trade because the price action is responsive to price zones, creating patterns of interest for high probability trades. One of the reasons was studied thoroughly by Daniel Kahneman and is known as Prospect Theory. Too often, traders will sit on losing trades for too long and close down winning trades too early.

Learn what makes countries unique in order to predict which currencies will rise and fall in value based on current economic or political climates. Meet other traders, research online and travel to understand the world. Don’t be afraid to invest in a currency in use halfway across the world.