Forex is the largest financial market in the world, with $6.6 trillion traded each trading day. The Forex market is open 24-hours a day, five days a week.
There is plenty of opportunity for trading Forex. There is a lot to learn when you start trading Forex, and, for a beginner, it can be overwhelming. One of the main issues for novice Forex traders is how to select which currency pairs to trade. Not all currency pairs are created equal. What's the difference between major currency pairs, minor currency pairs and exotic currency pairs？ It's no surprise that you might feel bamboozled by choice.
What novice Forex traders may not realize is that each currency pair has unique characteristics. They don't all act the same. Some currency pairs have more liquidity and volatility than others.
What are the best currency pairs to trade for beginners？
Your experience and aptitude determine your choice. It also depends on your preferred trading strategies. For instance, do you scalp Forex, or do you day trade or swing trade Forex？
This article will explain what currency pairs are, and we will help you decide which currency pairs to focus on for your preferred style of trading.
We have picked out five of the most popular Forex currency pairs for 2021. These currency pairs are the most traded with beginners and experienced Forex traders.
What Is Forex Currency Trading？
Forex is an acronym for foreign exchange.
Forex traders buy and sell currency pairs to make a profit from the daily price fluctuations. Each currency pair represents two currencies. For example, GBP/USD is the sterling pound and the U.S dollar. The first currency listed is called the base currency, and the second currency listed is the quote currency. So GBP is the base, and USD is the quote.
If you buy this currency pair, you expect the sterling pound price to rise. If you sell the currency pair, you expect the U.S dollar to be stronger than the pound, and the price will fall.
Even though you are selling the currency pair, you are, in effect, buying the dollar in anticipation of the price of the currency pair falling.
What Are The Top 5 Forex Major Pairs？
There's some dispute about whether there are seven or eight major currency pairs, so let's look at what formulates a major currency pair.
The strongest and most widely traded currency is the U.S dollar. Not surprisingly, this is because the United States economy is the largest in the world. The dollar is the dominant reserve currency worldwide and is the preferred global exchange currency. So the dollar carries some weight.
The majors all include the U.S dollar.
Below are five of the top major Forex currencies:
1. EUR/USD – (Euro – U.S. Dollar)
2. GBP/USD – (British Pound – U.S. Dollar)
3. USD/CHF – (U.S. Dollar – Swiss Franc)
4. USD/JPY – (U.S. dollar – Japanese Yen)
5. AUD/USD – (Australian Dollar – U.S. Dollar)
The above list is not conclusive. USD/CAD is as widely traded as USD/CHF, but oil prices can factor in with the price movement of USD/CAD.
Another heavily traded major currency pair is NZD/USD.
Later in the article, we will look at the characteristics of the 5 most traded currency pairs on the above list.
The prices of the major currency pairs fluctuate as trading volumes constantly change, especially during economic news announcements or unexpected world events.
The common denominator with these currency pairs is that they represent countries with high volumes of worldwide trade, and they are also countries with financial power.
The five major Forex currency pairs are popular because they have liquidity and volatility, presenting the best trading opportunities for Forex traders.
Does this mean they are the best currencies to trade？
Well, it's possible to lose even with the best currency pairs to trade Forex. You still have to read the market, find the best setups and execute a trade at the peak moment.
The major currency pairs tend to have lower spreads and generally provide better trading conditions for retail Forex traders. The trick is to get to know the top 5 most traded Forex pairs, and, with familiarity, it becomes easier to spot price behaviors and patterns for each currency pair.
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