What currency pairs to trade in Forex?

Although there is lots of currency pairs offered to Forex traders, if you are a beginner it is easier to start with major currency pairs:

EUR/USD
GBP/USD
USD/JPY

There are several good reasons for that:

1. These currency crosses are widely traded, thus providing liquidity which is needed in order to benefit from price changes.
2. They have tight spreads, except may be for GBP/USD, which most of the time receives higher spread quotation from Forex brokers as it is more volatile (e.g. has wider price ranges than other pairs).
3. They all are traded against US dollar, which automatically suggest that the most active trading hours would be during New York trading session – the session with the highest volume of trades.
4. And finally, there are many Forex trading systems that are developed for trading those pairs and can be found online.

What currency pairs to avoid?

Exotic and uncommon currency pairs should be avoided by novice Forex traders as some further knowledge is needed to trade such pairs successfully.

Here is the list of major currencies beginner traders should focus on:

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

Also novice Forex traders should try to avoid currency pairs which have high spreads. Spreads vary from broker to broker. The information about spreads can be found at brokers’ websites, or at the special column called “Spread” on the trading platform itself, or from the Ask/Bid table (found also on the trading platform) by subtracting Bid price from the Ask.

Here is an example:
Forex bid/ask example


On the screenshot we have USD/CHF spread = 3 (Ask – Bid = 0.9992-0.9989 = 3)
GBP/USD spread = 3
EUR/USD spread = 2
USD/JPY spread = 2


Currencies that have high spreads are more volatile, e.g. have wide price ranges and longer price spikes, which unprepared traders may find difficult to trade.

Also a common mistake done by many beginner traders is that they try to monitor too many currency pairs at once. Not only it makes trading hectic and more difficult to manage, it also prevents deeper analysis of the currency pairs and actually learning their “behavior” over the time.
Currency pairs do have their unique ways to move, react to economical events, form trends etc.
By studying one currency pair at the time, Forex traders have the ability to observe its behavior and learn the ways to trade the pair even more effectively.

What is FOREX

Because the value of each currency always on the move, it fluctuates depending on the local and global economic factors, there is always an opportunity to profit on those changes/fluctuations - it is called currency speculation.

Euro, US dollar, Swiss Frank, British Pound and Japanese Yen - these are the most traded currencies in Forex. Of course, trading is not limited to those currencies, Forex offers variety of currencies one can trade.
If to describe in simple words how individuals trade Forex it would look next way:
Forex trading in its prevailing volume is done online.
A person finds a Forex broker, opens a trading account with the broker and deposits money.
Forex broker provides to trader so called Forex trading platform - an application, a working environment, where trader buys and sells currencies, dealing online - in other words he speculates to make money on the difference of currency rates.
In Forex currencies are traded in pairs.
EUR/USD, GBP/USD, AUD/JPY, USD/CHF and so on.

The first currency in the exchange pair is referred to as the base currency and the second as the quote currency.
For example, EUR/USD exchange rate = 1.400
Here the price of the Euro is expressed in US dollars: 1 euro = 1.400 dollars
The exchange rate tells to trader how much of the quote currency should be paid to obtain one unit of the base currency.

A Quick Overview of FOREX

FOREX is a spot market, where foreign currencies are traded - bought and sold for profit.
FOREX is a worldwide currency speculation arena with no centralized place for trading and exchange.
FOREX is a huge market with trillions dollars turnover a day and the largest investors - banks, hedge funds, investment companies and so on.
FOREX is open to individual retail investors - Forex traders - through the services of Forex brokerage companies that provide an access to the currency exchange market and take care of buying and selling orders of their clients.
FOREX is a 24 hour market that is traded every day all year round, except for holidays.
FOREX allows trading over 150 foreign currency pairs, among which the most traded are: EURUSD, GBPUSD, USDJPY, AUDUSD, USDCHF, USDCAD and GBPJPY.
FOREX trading is based on technical (price charts) and fundamental (news, economic events) analysis.
FOREX is an online stay-at-home type of business for individual investors.
FOREX is an attractive financial instrument, which can be mastered by any person with any kind of education and/or social status.
FOREX is a type of market which nowadays can also be traded by automated online expert advisors without any human intervention.
FOREX is an alternative type of investment, which unlike any other investment carries one of the largest financial risks.
FOREX is a trading arena, where in order to succeed a trader needs to learn the rules of the market, its trends, moves and behavior, and be able to apply the knowledge under real trading conditions.
FOREX is difficult to trade without a trading method - a trading strategy or system.
FOREX is a fast growing industry, and by directly dealing with money it also became
a lucrative business to various scam dealers. Novice traders should be alert about any offers in Forex which sound too good to be true.
Finally, FOREX should never be associated with quick and easy money.