Just as there are tradable forex pairs in the forex market, there are also forex pairs with too much or too little of a spread, which can cause you to lose money should you decide to trade them.
This is why forex traders, particularly new ones, are advised to start with the most active forex pairs if they want to stand a chance of making any profit off trading.
• Not all forex pairs are the same, as some get deserved attention more than others and are classified as major forex pairs.
• It is always advisable to go for forex pairs that have been tested and trusted to yield considerable profits rather than risking the unknown.
• Some currencies are better suited to others as pairs, irrespective of the economic conditions of the countries that own these currencies.
That said, here are the worst forex pairs to be on the lookout for and completely avoid, as the case may be.
What is a Forex Pair?
A forex pair is simply a side-by-side comparison of two different currencies to determine the value of one over the other. In a forex pair, the first currency, which is the domestic one, is known as the base currency, and the second, which is the foreign one, as the counter currency.
Usually, most forex pairs are divided into major pairs, minor pairs, and exotic pairs depending on whether they have a comparison with the USD or not.
Worst Forex Pairs to Avoid
Below are the worst forex pairs to avoid trading:
The main reason why this currency pair is seen as a forex pair to avoid is simply down to the policies set by the Hong Kong government.
Since the country’s independence, the government decided to enforce a fixed exchange rate where the currency will be pegged to a certain amount, making it next to impossible for large fluctuations to occur.
What this means is that it would have a very low spread, making it quite difficult for traders to make any profit from this pair whatsoever.
However, all hope is not lost as other forex pairs such as GBP/HKD are a better alternative for trading compared to this pair.
If you have a good history of New Zealand, you will probably know by now that their economy is mostly agricultural and the fact that England does not engage in much trading with New Zealand is a major reason why this forex pair is one of the worst and should be avoided while trading.
Also, the fact that this pair has relatively low liquidity and too high a spread makes it highly risky to engage in while trading, which is why it is one of the worst forex pairs to avoid.
If, however, you insist on trading with the New Zealand currency, better options in GBP/USD and NZD/USD are there for you to make use of.
It may surprise you to know that many forex brokers do not even offer this forex pair for one simple reason – the difficulty of making money by day trading the pair.
The Argentine peso is a currency that has witnessed a major decline of over 43% in the past two years against the USD.
This is in part because of the huge external debt it has incurred and the dwindling economy it is currently facing, which, ironically, had one of the fastest growing economies in South America.
The few forex brokers that do offer this forex pair, if at all, charge a high spread to limit their losses, which is enough signal to any trader to steer clear of.
This forex pair combination is largely non-volatile despite the excellent economic conditions of both Switzerland and Japan.
The Swiss franc is seen as a top-tier currency because of how solid and healthy the financial sector of the country is.
The same thing can also be said about the Japanese yen, as Japan is known to have abundant resources in the diaspora.
The two currencies are even viewed as carrying trade opportunities because of the low-interest rates in their respective countries.
However, for some reason, these forex pairs do not work well together and are quite pricey to trade.
Nonetheless, both currencies work well with the USD as their base currency, so you might want to check these pairs out as better alternatives.
There are quite a good number of forex pairs in the forex market that you can begin with if you are looking to make considerable profits as you trade.
However, you should abstain from the above-listed forex pairs so as not to incur avoidable losses, especially as a new forex trader just starting your trading adventure.
Doing your research is also a good option so that you know which forex pair is best for you and how you can go about making profits from it.
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