What are the best forex pairs for making money with currency trading? The forex market is huge and if we look around, we soon realize that there are a huge number of possible forex pairs.
In theory, any two of the world’s many currencies can be exchanged and the trader can make or lose money on the exchange.
So how many currency pairs are there? There are around 150 currencies in the world. Of course there are many more countries than that, but many of the European countries use the euro, some countries use the US dollar and some developing countries who have their own currency keep it pegged to USD values to maintain stability.
Still, there are thousands of possible currency pairs. However, we do not need to know about all of them. Most brokers who offer forex services to retail traders (that is, individual traders operating their own personal account) limit the number of pairs that you can trade. Usually they will cover the major currencies in combination with USD and some cross pairs.
The major currencies in most people’s estimation are the US dollar (USD), euro (EUR), yen (JPY), pound (GBP), Swiss frank (CHF), and the Canadian and Australian dollars (CAD and AUD).
Therefore, there are 6 major pairs where USD is combined with any other of the majors. Cross pairs are those not including USD, such as CBP/CHF.
These are the best forex pairs for a retail trader to concentrate on. Generally, if a broker offers any minor currencies for trading, the spread will be high. The exception might be that a broker will offer the currency of their own country at reasonable rates even if that currency is not a major.
This is particularly true for secondary currencies like the New Zealand and Singapore dollars that are close to making it into the majors in terms of daily trading volume.
So you can trade any major pair or cross of the majors but unless you have reasons for doing otherwise, most beginners are recommended to start with EUR/USD for many trading. This is the highest traded pair which gives it a number of advantages.
First, there is a lot of competition between brokers so the spread is usually lowest for this pair. Second, the high liquidity means that there will probably be less slippage, and you are more likely to get the price that you see on screen. Third, forex news alerts have a lot of news about these currencies so you are not so likely to get caught out by unexpected announcements.
If you are using an expert advisor or currency trading robot, on the other hand, it may be set up for other pairs. In that case it is best to use it according to its settings.
Robots often use systems that are pair specific, i.e. that will not work so well on any but the recommended pairs, so those will be the best forex pairs for an expert advisor.
