So, you decided to try yourself as a trader and you want to make good money in Forex, but you have no clue which currency pair to give preference to. Today, we will try to figure it out.
As a rule, most novice traders choose the euro/dollar pair and start trading without even wondering if there are other interesting instruments to look into. And there are also newbies who decide to trade all pairs at once, which is a big mistake too. Therefore, at the beginning of your trading journey, it is advisable to trade a little and very carefully.
So, what are the best currency pairs for novice traders?
It is worth saying right away that there is no “right answer” to the question of which currency pair is the best to trade at the start. No one can tell you for sure, but there are recommendations and advice from more experienced Forex traders, and it’s worth considering what they think.
In addition, it is important to understand each trader has his own preferences regarding favorite currency pairs and makes his choice based on a lot of different factors that may affect the market, as well as his personality traits and temperament. That is why a novice trader needs to decide for himself which currency pair to pick while taking into account the experience of other traders and his preferences at the same time.
How to make the right choice?
Of course, there are no financial assets in Forex that are divided into instruments for beginners and professionals. But at the same time, there are some important points that a beginner trader should take into account when selecting a trading instrument.
First, you need to choose the economy, for example, Canadian, Japanese, Australian, etc. When choosing a currency pair, one should proceed from here.
Let’s say your choice fell on USD/JPY. This means that you need to collect data sources for these currencies. Pay attention to the dates of significant publications in the Economic calendar, which relate to the United States and Japan, look for the sources of economic news for both these countries. Based on previous news and publications, analyze the pair’s dynamic and how the market moods changed. Identify the strongest impulses and important events and releases that need to be monitored.
There is an opinion that it is better for a novice trader to choose the most liquid and popular assets. However, this is not the only way to go. The point is that it is much easier to analyze smaller economies. For example, the economy of New Zealand is influenced by fewer factors than, for example, the Eurozone or the United States.
With that said, currencies such as CAD, NZD, AUD, ZAR, SGD would be more attractive.
Pay attention to the following pairs
- EUR/GBP (Euro/Pound). This pair is convenient to trade because when the exchange rate decreases, it’s pretty easy to forecast the result of a trade with high accuracy.
- CHF/JPY (Franc/Yen). A good instrument for beginners. The behavior of this asset is easy to predict, but forecasts for this pair are not always accurate.
When choosing a pair, don’t forget to take into account the spread too, otherwise, part of your income will be consumed by it. Yes, and choose a less volatile asset at the beginning. Rapid price spikes are known to have a negative effect on the fragile psyche of a young trader.
The market offers a wide selection of foreign exchange instruments to trade. Each of them has its own characteristics and intricacies. You need to go through a lot of pairs before you figure out which are comfortable to trade and can generate you a good profit.