Forex as an entity has its own atmosphere, its own lingo- and its own approach to international markets. By far the most important part of Forex trading is deciding on currency pairs to follow and trade on. Should you go for the Big 5, or go for smaller, less-known pairs which might pay higher? Should you mix and match both, or is there a system to it? And what will work best for your Forex trading style?
- Forex Currency. They always come in trade pairs, with the base and the secondary. For example, one pair is USD/CHF. The base currency is the dollar, the franc is the secondary. The USD is what the entire Forex trade market is based upon ($1). While there are exceptions, this is the norm.
- Major Currency Pairs. Especially when you’re starting out, it’s best to begin with the major currency pairs. The market is large and fast-moving, with a lot more stability. Which means trading in the major currency pairs is somewhat safer than the lesser-known pairs, which can bring a high profit if you’re an experienced trader.
- Choosing a Pair. This comes down to personal preference and how knowledgeable you are within the Forex trade market. Specifically, you need to know and understand both halves of your pair intimately, along with the respective countries’ trends and up-to-date economic factors. With the lesser-known currency pairs, it can be more difficult and time-consuming to find the basic information you might need for trade decisions.
- Factors For Currency Pairs. Because the Forex market is 24-hours, following timezones and fitting them into your schedule can also play a part in deciding which Forex currency pairs are best for your trading. Take into account you’ll want a pair that have trading hours that coincide with when you’re free to trade.
- Availability. Different brokers offer different pairs, and you can make a decision one of two ways: choosing the broker according to the pairs they trade in, or having the broker help you with the choice of the best currency pairs for you and your Forex account.
As you become more accustomed to the Forex trading market, you can experiment more with your currency pairs and see which ones seem to give you the best results. If ever you’re in doubt, ask your broker- that’s what they’re there for.