[image:pixabay]
Every trader has a different style and preference for their business, and this affects their choice of currency pair. Knowing which pairs are profitable and reliable will lead to more successful trading.
But how does one know which pairs to go for? Here is some guidance and strategies for choosing the best cross-currency pairs.
While more experienced traders will select a currency pair based on their style of trade, the majority of traders will instead focus on the pairs that specifically trade in large volumes. These pairs are known as the major currency pairs, and each of them is compared to the USD:
These all share a few qualities that have contributed to their becoming the major currency pairs: their low spread, dense liquidity, and high trading volumes. These all make these pairs more accurate for technical analysis than other forms of currency, which is why they can be preferable to work with.
The general methods and preferences of trade will affect the choice of pair. For example, if someone prefers to trade by following trends, picking a pair with strong trends will do them better than picking a pair that tends to be stuck within a range.
The inverse is also true, as many traders prefer to trade within ranges. Some currency pairs will remain consistently within a particular range and are better suited for such traders.
There are also traders who pick options with low spreads, such as the seven above. While this has proven consistent, there are certainly fewer opportunities to take advantage of more significant spikes and drops.
The major currency spreads all share a common factor: low spreads. While some traders choose their pair solely based on this, one should also consider the currency pair’s volatility and how it compares to the spread.
Some currency pairs, such as the GBP/JPY, have a wider spread than the major pairs, but the average price amounts can be much larger over a given period of time. This means that traders can find great opportunities because of sudden strong trends, which won’t be found in a pair with a lower spread.
Knowing how much the market has to move to cover a trader’s trading feeds will affect how much of a profit they make on any given trade. For this reason, it’s always recommended to trade on charts that give both the bid and ask price lines, as they give essential information on when to trade.
While one might want to wait as long as possible for the highest profit, this can be quite damaging to a trade. Leaving a trade too late can incur rollover fees, but too early could result in fees as high as 20% of one’s profit target or more.
The nuances are complex, as there are many variables at play when it comes to analysing price movement in relation to profit stops and trading fees.
Choosing the right currency pair can dramatically change how successful any one trade is. Not all currency pairs are equal, and measuring the spread and volatility, and keeping in mind one’s method of trading, will have a head impact on choice. The major pairs are all reliable, but they may not necessarily be the best choice. It all depends on the specific goals of the individual trader.
Hey Guys - thought I’d just give a quick reach-around and say a big thank you to our rea...
[imagesource:CapeRacing] For a unique breakfast experience combining the thrill of hors...
[imagesource:howler] If you're still stumped about what to do to ring in the new year -...
[imagesource:maxandeli/facebook] It's not just in corporate that staff parties get a li...
[imagesource:here] Imagine being born with the weight of your parents’ version of per...