The rational thing to do once you get your forex trading account approved is to jump straight in and start trading. This could be a wrong approach if one thinks all currencies are the same.
In this article, I will highlight the best currency pairs to trade for beginners and what makes them unique.
This currency pair comes on top as the most traded in the world due to its liquidity and tight spread. The EUR/USD is traded by most investment banks, fund managers, pro-traders therefore making it sometimes difficult to predict because of huge market influences on its demand and supply.
This currency pair could change direction several times a day faltering initial predictions. The EUR/USD is volatile and could do 100-150 points in a day. This is of course what experienced traders want,” Volatility”.
Its unpredictability from time to time misleads traders, making it not the best option for beginner forex traders. Financial analyst has also missed accurate predictions of this currency pair, time and time again.
This currency pair is ideal for traders that understand the trend. The USD/JPY is highly unpredictable and can make sharp leaps during trading sessions therefore resulting in huge profits or losses to your portfolio.
News on the Japanese and U.S. economy have major influences on the USD/JPY. Economic news regarding the dollar also impacts the behaviour of this pair.
The USD/JPY is not the best currency pair for beginners due to it very high and unpredictable leap, however, if its trend is studied carefully, one can understand its behaviour and greatly profit from it.
The GBP/USD and the EUR/USD have similar movement patterns but can go south at unexpected periods. Beginner forex traders should keep this at the back of their minds when choosing to trade this pair.
Often nicknamed “The Cable”, this currency pair is sensitive to political news in the UK, the GBP/USD is a strong mover. This pair eavesdrops on news affecting the EUR/USD being a very close alternative to traders not trading the British Pound.
The GBP/USD often show a form of support or resistance misleading traders, then prices begin to fall or rise against the trader’s position.
This major currency pair follows a similar pattern with the EUR/USD. Sometimes, it can be difficult to predict with basic technical analysis alone.
The USD/CHF can be easily analysed by beginners when compared to other currency pairs. For example, other major currencies follow the USD/CHF when it breaks a major support or resistance level.
To get on with this pair, studying its movements on opposite sides is the way to go. This makes the USD/CHF one of the best currency pairs for beginners.
This currency pair is also known as the “Loonie”. The is the name of the duck which appears on the Canadian One-dollar coin. This currency pair reacts to the price of oil, as oil prices rise or decline, the USD/CAD follows the same curve making it a good pair to analyse technically.
The USD/CAD is one of the best currency pairs for beginners in view of volatile oil prices, however diligent technical analysis and caution is advised.
AUD/USD and NZD/USD
Often referred to as the “Aussie” and “Kiwi”, they are known for their calm flow and mid volatility. This behaviour makes it easy to read and follow. This is one of the best currency pairs for beginners because it offers a clean and straightforward way to go about its technical analysis.
It’s important to note that the AUD/USD and NZD/USD are sensitive to the economic and climatic events in Australia such as hurricanes, bush fires, volcanoes and other geological disruptions.
Surprisingly, the price of metal also affects these pairs. As the price of metal falls, these currency pair fall alongside, which makes the parameters for trading predictable. Overall, the AUD/USD and NZD/USD are a viable currency pair to trade.
This is another ideal currency pair for beginners, usually predictable owing to gentle daily leaps of about 5 -10 points per day. The EUR/GBP is least volatile but can sometime give off surprising moves as other currency pairs.
When this pair makes a move, its price leap is usually huge covering up for its calm nature. Taking up a few points off the huge spike a day is okay to get the best of this pair.
Experience traders rarely trade this pair due to its high volatility and unpredictability; the EUR/JPY is risky throwing up surprises which could possibly put a huge dent in your capital if traded without caution.
Beginners should put trading this currency pair on hold till they master currency trading and possibly give it a shot.
Most Predictable Currency Pairs
From our list, we can suggest the follow pairs are predictable owing to historical trends as future performance are not guaranteed.
Trading any of these pairs below should be done with caution and diligent technical analysis on your part:
Most Traded Currency Pairs
In currency trading, a few currency pairs are the most dominant amongst all trades. These currency pairs are referred to as the “Majors”