Is there a way to know the best FX trading pairs? Why do you need to know the major Forex trading pairs? These are common questions asked by new traders and not all of them get to know the real answer. Actually, there are different ways of finding the best currency pairs that you can trade in the Forex market.
4 Things To Know The Best Forex Currency Pair
Always consider the major currencies
In the Forex market, certain currency pairs are known to play major roles in trading. These are the EUR/USD, USD/JPY, GBP/USD, USD/CAD, AUD/USD, and USD/CHF. These currencies are known as the most well-known currencies in the world and the most traded as well. They get to have the highest liquidity and volume as well.
Since these currencies are popular, they can become a good starting point for you. You may use the watchlist to analyze these popular pairs to know if there are any available technicals.
Know The 8 Popular Currencies
This time, we are not referring to currency pairs but the actual individual currencies. Knowing these popular currencies, you will get the chance to pair them with whomever you think is the best to be paired off. The 8 most popular currencies are;
Just like in tip number 1, you may have a watchlist for these combinations and check their status every day and their potential for trading opportunities. Since they are also popular currencies, they get to have a good volume of trades and most liquidity.
Fundamental analysis will also help you in finding the best Forex pairs for you to trade. It is the predicting of the price movements according to the economic data as well as news releases. For instance, you are well aware that there will be news to be announced in a certain country. You will have to monitor it since it can affect the currency pairs. The same goes if you are well aware of the economic data. It would be great if you can monitor the currency that corresponds to it.
This is mostly the most favored way among traders when it comes to finding the best pairs in Forex. Technical analysis means predicting the price movements thru price action by using charting tools and charts. With the use of technical analysis, you can observe the pairs continuously as they may not appear ready right away. After a certain period of time, several interesting patterns will be formed which leads to breakouts. The importance of technical analysis are as follows;
- Identifying trends
- Identifying support, pivot points, and resistance
- Highlighting trendlines
- Identifying channels
Currency Strength Meter
You can find different kinds of currency strength meters nowadays. They might also come free of charge or paid. Currency strength meters determine the strength as well as the weaknesses of currencies. Through the use of this currency meter, you will know which of these currencies are the strongest and weakest. Ideally, you can pair them for either a long or short FX trading strategy.