Which are the Best Currency Pairs to Trade for Beginners?
Best Currency Pairs to Trade: Because the major currency pairs are the most actively traded forex pairs, many experienced traders only trade the major currency pairs because these are highly liquid and their price movement tends to be more predictable. This makes these major currencies; USD, EUR, GBP, JPY and CHF the best currencies to analyze using analysis as they are the most liquid.
Major currency pairs are the currency pairs that are the most traded currency pairs by volume of currency trade transactions - these currency pairs are: EURUSD, USDJPY, GBPUSD & USDCHF.
Currencies are traded in pairs of two e.g. EURUSD
Daily Trading Market Transactions Turnover of Major Currency Pairs by Volumes
The USD is the most traded currency in the market, followed by EUR, GBP, JPY & CHF, the daily market turnover volume share taken by each of these 5 currencies in terms of percent is illustrated below:
USD - 85%
EUR - 40%
JPY - 20%
GBP - 13 %
CHF - 9 %
Since transactions are in pairs the total will be 200 %
For example the EURUSD pair: EURUSD = 100 % EUR + 100 % USD
Summing up the total of the big four major forex pairs = 85 + 40 + 20 + 13 + 9 = 167 % . Note these four currency pairs are made up of five individual currencies which make up the sum total of 167%.
Major Forex Currency Pairs - Which are the Best Currency Pairs to Trade for Beginners?
Major currency pairs have a combination of the USD & one other major(EUR, JPY, GBP, CHF).
The 4 major forex pairs or the big four currency pairs in Forex are:
- EURUSD
- USDJPY
- GBPUSD
- USDCHF
These major currency pairs are the most traded because they have a high trade turnover & are the most profitable.
These major currency pairs are the best currency pairs for day trading, if you want to make the most profit it is best to trade only these four major currency pairs only.
Therefore volume for Major Forex Currency Pairs is:
Forex Major Currency Pairs = 167 % of all turnover
Other Forex Minor Currency Pairs Combined = 33 % of all turnover
The more the liquidity of a currency, the more the volatility, volatility means a currency is likely to move in a trend in one particular direction up or down and when the prices are moving in a particular direction within a market trend it is easier to make money as opposed to when prices are not moving in a particular direction - ranging market.
On the other hand, all the other currency pairs, also known as minor forex pairs or currency crosses only make 33% of all daily trade transactions turnover & are said to be illiquid, meaning they do not have a lot of volatility & as such most of their currency price movements are choppy or range bound. These means that the minor forex pairs are the most hard to analyze using analysis studies because they don't show defined market trend movements in one particular direction (they do not move in a trend).
For Example by just trading EURUSD then a currency trader will be participating on 85 + 40 = 125% of all trade transaction volume, which is two-thirds of all currency trades. This is another reason why some traders just stick to the EURUSD alone.
