Forex Pairs: What Is The Best Currency Pair To Trade?
If you are exchanging Swiss francs for US dollars, for example, the currency pair is CHF/USD. The pair is the two currencies involved in your trade. Forex pairs are always involfed in currency trading.
Theoretically you could trade any two currencies of the world, but in practice most foreign exchange trading is limited to the currencies of the larger financial powers. This does not necessarily mean the biggest or most politically powerful countries. Switzerland for example is only a small country but is a major player in the financial markets because of the global importance of the Swiss banks.
There are 6 major forex pairs which between them account for 90% of the funds traded on the forex markets. These are:
- the euro and US dollar: EUR/USD
- USD/GPD: the US dollar and the British pound, because it used to be synchronized on both sides of the Atlantic by a cable running under the ocean is nicknamed Cable.
- USD/JPY: the US dollar and Japanese yen.
the US dollar and Swiss franc: USD/CHF
the Australian dollar and US dollar: AUD/USD
- USD/CAD: the US dollar and Canadian dollar.
In the beginning it is best to stick with the majors. But some traders do get involved in other combinations of these major currencies or pairs that include other currencies such as the New Zealand dollar.
According to a 2007 study, the US dollar is the most significan single currency and is involved in 85% of trades. The euro is second at 37%. Next come the yen, pound, Swiss franc, AUD and CAD in that order. Because there are always two currencies in every trade, these add up to more than 100%
What Is The Best Currency Pair When You're Just Starting?
If you are just starting out in forex, most experts advise beginning with the EUR/USD pair. This is because there is a lot of information about these currencies and the high liquidity results in a smaller spread, so your costs will be lower.
Unless they have special knowledge, most newbies avoid some of the other currencies because they have particular characteristics which make them unpredictable. For example Canada is an oil exporter so the value of the Canadian dollar is strongly influenced by the price of oil. Because Japan is a large consumer and importer of oil the Japanese yen can also be affected by the price of oil in the opposite direction.
You will not want to get involved in a lot of different currencies when you are starting out. The best thing to do is probably to take the EUR/USD market and stay with that for the first few months at least. GBP/USD would be the second choice of the major forex pairs for most new traders. - 23167
Theoretically you could trade any two currencies of the world, but in practice most foreign exchange trading is limited to the currencies of the larger financial powers. This does not necessarily mean the biggest or most politically powerful countries. Switzerland for example is only a small country but is a major player in the financial markets because of the global importance of the Swiss banks.
There are 6 major forex pairs which between them account for 90% of the funds traded on the forex markets. These are:
- the euro and US dollar: EUR/USD
- USD/GPD: the US dollar and the British pound, because it used to be synchronized on both sides of the Atlantic by a cable running under the ocean is nicknamed Cable.
- USD/JPY: the US dollar and Japanese yen.
the US dollar and Swiss franc: USD/CHF
the Australian dollar and US dollar: AUD/USD
- USD/CAD: the US dollar and Canadian dollar.
In the beginning it is best to stick with the majors. But some traders do get involved in other combinations of these major currencies or pairs that include other currencies such as the New Zealand dollar.
According to a 2007 study, the US dollar is the most significan single currency and is involved in 85% of trades. The euro is second at 37%. Next come the yen, pound, Swiss franc, AUD and CAD in that order. Because there are always two currencies in every trade, these add up to more than 100%
What Is The Best Currency Pair When You're Just Starting?
If you are just starting out in forex, most experts advise beginning with the EUR/USD pair. This is because there is a lot of information about these currencies and the high liquidity results in a smaller spread, so your costs will be lower.
Unless they have special knowledge, most newbies avoid some of the other currencies because they have particular characteristics which make them unpredictable. For example Canada is an oil exporter so the value of the Canadian dollar is strongly influenced by the price of oil. Because Japan is a large consumer and importer of oil the Japanese yen can also be affected by the price of oil in the opposite direction.
You will not want to get involved in a lot of different currencies when you are starting out. The best thing to do is probably to take the EUR/USD market and stay with that for the first few months at least. GBP/USD would be the second choice of the major forex pairs for most new traders. - 23167
About the Author:
T. O'Reilly has worked at forex trading for the past two years and is earning$363 per day. Learn how you can do the same using forex pairs. Click here: http://daytradingthecurrencymarket.com
posted by X - Men @ 4:57 AM
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