With the growing popularity of Forex trading, traders can enjoy leveraged trading with low-margin requirements. Beginner traders can explore a range of currency pairs and grasp opportunities in the biggest and most liquid market in the world with about $7.5 trillion dollars traded each day in 2022. Especially for those traders who prefer high leverage trading the forex market is a great place to explore the potential of online trading.
Nevertheless, before you jump into forex trading, you must become familiar with the most popular currency pairs and how to trade them. This article will deal with the most popular currency pairs you need to be familiar with and give you a few tips to use when trading them.
Understanding currency pairs
A currency pair displays the rate of exchange between two different currencies. All currencies are traded in pairs in the forex market, so you basically buy one currency and you sell another.
Every currency pair consists of the base currency and the quote currency. The base currency is the first currency in the pair, while the quote currency is the second currency in the pair. For example, in the EUR/USD, the euro is the base currency and the US dollar is the quote currency.
The major currency pairs are the most popular and most traded currency pairs and include the US dollar, Euro, Japanese yen, British pound, Canadian dollar, and Australian dollar. These usually have high liquidity, narrow spreads, and moderate volatility.
On the other hand, liquidity in minors and exotics is lower, spreads wider and volatility is high.
Economic indicators, central bank policies, geopolitical events and market sentiment are among the many factors that determine the level of exchange rates between currencies. Understanding how these factors influence certain currency pairs and recognising specific patterns characteristic of each of them. Also will help you better grasp price trends, and anticipate certain market movements.
But some traders also choose to concentrate on technical analysis and reading charts in order to make proper trading decisions.
Starting to trade currency pairs
Beginner tips
If you are a new trader, one of the most important questions to ask is which currency pairs are the best to trade on the forex market. If you want to discover which currency pairs are the most profitable, or just want to make a few extra dollars, then knowing what currency pairs you can trade will be a good idea.
It is critical that you must take into account the specific traits of each currency pair before choosing which pairs to trade. Having a good feel of how different currency pairs react to certain economic indicators or events will help you to make better and more accurate trading decisions.
Locating the ideal currency pairs to trade for beginner traders is a daunting task. In this article we will discuss what things you need to keep in mind.
Additionally, we will discuss what kind of important features need to be present in your trading strategy when trading these currencies.
1. EUR/USD
New forex traders can enjoy low spreads, low volatility and liquidity characteristic of the EUR/USD, one of the most traded currency pairs in the world.
The euro may be stable but the US dollar is the most traded currency around the globe. The result of having two strong currencies makes this pair one of the least volatile.
As the most liquid currency pair, the EUR/USD doesn’t move very much in large price range movements, thus, making it one of the best currencies to trade for any trader, whether they are a beginner or a more experienced trader.
2. GBP/USD
The most traded currency pair in the world is actually the GBP/USD, that is, the Cable. GBP and USD are the two most popular and liquid major currencies in the world.
Thanks to its tight spreads and limited fluctuations, the GBP/USD is an ideal currency pair for beginner traders. Also, it is less volatile than most other so it is less risky for beginners.
3. USD/JPY
Beginners tend to go for the USD/JPY currency pair. This pair is characterised by its low volatility and tight spreads, which make it a good pair for traders who want to make slight profits at low risks.
Due to the fact that Japan’s economy is largely dependent on the United States, USD/JPY trades may be strongly affected by news and events from both countries. To explore the full potential of trading this pair, it is essential to follow economic news from both countries.
4. USD/CHF
USD/CHF is another good pair, given its low volatility and stability. The US dollar is one of the strongest currencies and the most reliable one after the Swiss Franc.
This pair is perfect for those needing a more stable market with little spreads. The currency pair is usually seen as a safe and low-risk trade for traders who want to enter the market.
5. AUD/USD
First-time forex traders usually opt for AUD/USD, one of the most traded currency pairs. Due to the low spread and high liquidity, the AUD/USD is considered as one of the best pairs for practicing trading.
Beginners could find the AUD/USD to be a good starting point as the pair is more predictable and less likely to have unpredictable increases or drops. In most cases, this combo is also regarded as the least volatile.
Overall, the most suitable currency pairs for beginners are EUR/USD, GBP/USD, and USD/JPY. These three pairs are the most promising for newcomer traders.
However, to do this they will need to understand the fundamentals and also have a good grasp of technical analysis. Most importantly, new traders need to also have a firm grasp of risk management. Beginner traders need to employ a set of strategies to minimise potential losses and avoid risking all their trading capital.
Trading with T4Trade
A great place to start trading your favourite currency pairs is T4Trade. The trusted broker is well known for its excellent services and tools and offers a wide range of resources to help all traders improve their trading skills.
With T4Trade, you can diversify your trading portfolio and discover hidden gems beyond the major currency pairs. Traders can begin trading the most popular currency pairs but also explore less popular pairs with great potential.
T4Trade offers low spreads and low trading fees which makes trading affordable for traders who trade popular currency pairs. Traders are able to control their trades more efficiently and make even greater profits as a result of lower spreads.
T4Trade presents traders with state-of-the-art platforms that are packed with modern-day trading tools such as indicators and executing options. Traders can be comfortable with the user-friendly T4Trade Web Trader App or the customisable MetaTrader 4 (MT4) platform as they get to access real time market data, technical indicators and charting tools that help them to make informed trading decisions.
T4Trade offers free trading education, with educational webinars and podcasts that provide tips on how to become more efficient and stay updated on what is happening in the FX market. Articles, eBooks and more are also available.
T4Trade’s customer support is ready and available 24/5 to assist all traders with any queries related to trading. Whether you want to access customer care through live chat or email, you will definitely receive immediate help whenever you need it.
Disclaimer: This material is for general informational and educational purposes only and should not be considered investment advice or an investment recommendation. T4Trade is not responsible for any data provided by third parties referenced or hyperlinked in this communication.
