The forex market has a lot to offer – you can trade whenever and wherever you want, you can trade whatever currency pair you want, you can access accurate market overviews and analytics, you can have a broker that provides 24/7 support to resolve any of your issues. With all the opportunities that you can discover in this market, your decisions play a crucial role. Everything matters in the forex market – the time you choose for trading, the currency pair you want to trade, the strategy you apply, your discipline, market ups and downs, etc. Let’s focus on the process of choosing a currency pair today to close a trade with profit tomorrow.
With all the opportunities that you can discover in this market, your decisions play a crucial role.
Things to Consider
- Trading hours. When it comes to choosing the time for trading, you should remember that it depends on the currency pair you want to trade.
- Fundamental and technical analysis. Think of analysis as a lighthouse that will help you find a direction.
- Broker. Make sure you’re satisfied with the trading conditions of the broker you cooperate with.
- Strategy. It just keeps you organized.
- Discipline and patience. These two traits play a crucial role when it comes to professional trading. When things get out of control, we are ruled by emotions. This is where problems originate.
Trading currency pairs means that a trader is buying one currency and selling the other currency. Here is a simple example of how it works: let’s take GBP/USD as one of the most traded currency pairs in the forex market. The "GBP" symbol is the abbreviation for the British pound sterling, while "USD" stands for the US dollar. In our GBP/USD currency pair, GBP is a base currency, and USD is identified as a quoted currency. As you can see, all trading operations are always conducted with two different currencies.
Let’s add some figures: assume that the GBP/USD currency pair is trading at 1.37454, and if a trader has an intention to buy a currency pair, that means that he/she needs to pay $1.37 for £1. Our example demonstrates that the dollar is weaker than the pound sterling, so a trader needs more dollars to buy pounds sterling.
The Most Traded Forex Pairs in 2022
As you might understand, there can’t be any recommendations about which currency pairs you should or shouldn’t trade since it’s your own choice and responsibility. The best currency pairs for trading are the ones that have the highest trading volume – they’re also called majors. Such currencies bring volatility to the FX market, helping buyers and sellers conduct trading operations quickly and with low spreads. Let’s have a closer look at the top forex currency pairs in 2022 to understand the reasons for their "popularity" among all forex market participants:
This pair is the most widely traded one in the forex market since it represents a combination of the world’s strongest economies – European and American. The currency pair is affected by the factors that have an influence on the value of one currency in relation to another currency.
Talking about the best trading time, it is the following: focus on the overlap of the London and New York trading sessions (1 p.m – 4 p.m. GMT); this is when two markets are active, and that causes increased volatility. This currency pair is suitable for different strategies (like swing trading, day trading, position trading, etc.) and all traders – professionals and beginners.
This currency pair is highly volatile and driven by the changes in the American and Asian markets. Since Japan is the world’s exporter, its relations with China greatly impact the USD/JPY pair. Smooth trends and increased liquidity make this currency pair the right choice for novice and experienced traders. The highest liquidity is observed during the overlap of the US and European trading sessions (from noon till 4 p.m. GMT.).
Read more: How to Read Forex Currency Pairs
Industrial, employment, and inflation data (as well as BoE inflation letter), interest rate decisions by BoE influence the direction of the GBP/USD currency pair the most. It’s known for its fast-changing movements during news releases. It’s recommended to trade this currency pair if you have some experience and flexibility to the market changes – consider intraday, position, or swing trading.
Talking about the recommended trading hours, they’re the following: 6 a.m. – 4 p.m. GMT. Trading in this time range brings more profit opportunities and lower spreads due to the size of the moves.
As any other currency pair, this one generally depends on the economic stability of two countries that represent the currency pair. GDP (gross domestic product) and employment data are the indicators that dramatically impact the movement of the currency pair. But still, while the Swiss franc is considered to be a very stable currency, the behavior of the USD/CHF currency pair mostly depends on the US dollar, which is a highly volatile currency. Consider trading in such a time range: 1 p.m. – 5 p.m. GMT.
There aren’t any better forex currencies to trade since it all depends on your trading experience and objectives. Choosing a currency pair for trading means conducting a thorough analysis. Don’t underestimate this step. Every currency pair in the forex market has its own "behavior." If you’re new to trading, try focusing on one currency pair, learn its characteristics, weigh the pros and cons, trade, and feel confident trading it. The right currency pair is the one that generates profit. Finding it is easy but it takes practice and discipline.
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Try your hand at currency trading by opening a demo account on JustMarkets. It’s a quick and risk-free way to master trading in the most liquid financial market. A practice account will help you learn trading basics and develop a strategy before investing money. Start trading today to take care of your future tomorrow.
Which Currency Pair is the Most Profitable in Forex?
There isn’t such a currency pair that is considered to be the most profitable since the profitability of all currency pairs depends on the news releases, trading time, trader’s expertise, etc. When it comes to the most widely traded one in the forex market –it’s the EUR/USD currency pair, which is known for its high liquidity and tight spreads.
What is the Easiest Forex Pair to Trade?
The easiest currency pair to trade is the one you’ve thoroughly analyzed before opening a position. Let’s say you know all the hidden pitfalls and behavior of the EUR/USD, and considering it’s increased liquidity, trading this currency pair becomes easy and profitable.
Can I Trade Forex at Night?
Yes, you can trade forex anytime you want. This market operates 24/5 in different parts of the world, starting from 5 p.m. EST on Sunday until 4 p.m. EST on Friday.
What Currency Pair Should I Trade in 2022?
Every currency pair in the forex market has its own specifications, so your choice strongly depends on the level of your trading expertise, strategy, objectives, and financial capacity. Consider starting with majors (the most widely traded currencies in the forex market.)
Can Forex Make you Rich?
Sure, and there are hundreds of successful stories that traders share every day. You can make trading profitable once you prioritize discipline, patience and rationality in your everyday activities. This is where you shouldn’t concentrate on making money quickly but stay focused on the process itself.
What is the Safest Currency to Trade?
You should probably pay attention to the currencies of the countries with a strong and stable economic situation, such as Switzerland, the US, the UK, etc.