Being the largest and highest liquidity in the world, the forex market can be difficult to understand. This can be overwhelming to beginners as they don’t know where to start. This will lead to a serious of questions, and one of these is which are the most popular currency pairs to trade.
If you’re reading this, chances are you’re a beginner that wants to find out what are the most popular currency pairs. First, you have to know what is forex trading, and what you should know about it. Ignoring the basics and jumping right into it is one of the reasons forex traders lose money.
Going back, let’s discuss first currency pairs. They measure the two currencies within the pair in terms of relative wealth. One currency is the base currency, while the other is the counter currency. When you see a value of GBP/USD 1.01, this means that the base currency (GBP) is worth 1.01 times the counter currency (USD). When you invest in a currency pair, you’re betting that the base currency rises in value compared to the counter currency.
Furthermore, each currency pair is the economy of a country. This means that managing a currency pair can be extraordinarily complex. This means, you’re dealing with two major economies and their relationship with each other. The most important factors of a currency are generally stability and liquidity.
Let’s take a look at the most popular currency pairs to trade.
USD/EUR is considered to be one of the most popular currency pairs in the forex market. It has the lowest spread among modern world forex brokers. And It is a good pair to trade if you don’t want to get involved in something too risky. Since it’s not very volatile, you can set up trades with USD/EUR without worrying too much about a making huge amount of losses. It’s easier to create analysis and strategies that will benefit the trader. In addition, the US dollar and the Euro are the 2 largest currencies in the world. Therefore, it has very high liquidity and stability.
Among the most popular currency pairs, the United States and Japan create a good pair for those seeking profit. It’s extremely liquid, and it is the 2nd most traded pair on the forex market. With low spreads and good liquidity, it has a smooth trend that’s relatively easy to follow. It’s also expected to offer more substantial returns down the line. One of the factors that contribute to this is the slow economic growth within Japan’s trading partners. This could result in the yen depreciating in the future. If the forecast is correct, the USD/JPY will continue to grow only more profitable.
As one of the most popular currency pairs, this pair has led to significant gains in the forex market, thanks to profitable pips and broad jumps. However, it’s considered one of the most volatile of the majors. If you’re planning to trade USD/GBP, don’t forget to apply plenty of market analysis information, and minimize the amount of risk by implementing tactics such as using a stop loss.
If you want to be profitable, start with a pair that you can really familiarize yourself with like learning its patterns. Make sure you study forex market before making an investment. There are so many popular currency pairs to trade, and it’s recommended to try trading most of them.
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