Beginning Forex traders often find themselves confused about which Forex currency pairs are best to trade. The main reason they get confused is simply because there are so many different currency pairs and so many traders think that the more Forex pairs they follow the better their trading results will be. However, the reality of the situation is that by analyzing too many Forex currency pairs, you can induce analysis-paralysis. You will try to analyze and trade too many pairs, and thus you will second guess yourself, over-trading, over-leverage, and probably lose a lot of money along the way.
So, if this is the case, then a logical question to ask is what Forex pairs to trade? The answer is that you should stick to the “majors”, these are the currency pairs of the world’s biggest economies; the U.S. dollar, the euro, the British pound, the Australian dollar, the New Zealand dollar, the Canadian dollar, the Japanese yen, the Swiss franc, and the Chinese Yuan, although currently China does not “float” their currency on the international exchange, meaning they artificially control it, so you can’t really trade it.
When learning to trade the Forex market you need to stick to the major currency pairs, trade your Forex strategies on these pairs before you attempt to trade any of the “crosses” or “exotics”. The primary reasons for sticking to the majors are that they offer better liquidity and lower spreads; they also have more stable trends. So, no matter what Forex trading strategy you are trading with, you will be doing yourself a big favor by learning to “master” it on the major Forex currency pairs before you try trading any other instruments.
You may also want to follow gold and silver as you track the major currency pairs. Gold and silver are considered to be international currencies because they are precious metals and are considered safe-havens in times of economic turmoil. They are also commodities and have an influence on the value of the U.S. dollar, which is the most widely traded currency of them all.
Most importantly, make sure you know the best Forex pairs to trade your Forex strategy on before you begin demo or live trading. Don’t make the mistake of trying to trade pairs with wide spreads or poor liquidity, many aspiring traders make these mistakes and they are very simple to avoid. Check out more of the articles on this website to learn more of the basics of Forex trading.
What Forex Pairs to Trade Your Trading Strategy On?
