Forex Pairs: What Is The Best Currency Pair To Trade?
If you are exchanging Swiss francs for US dollars, for example, the currency pair is CHF/USD. The pair is the two currencies involved in your trade. Forex pairs are always involfed in currency trading.
Theoretically you could trade any two currencies of the world, but in practice most foreign exchange trading is limited to the currencies of the larger financial powers. This does not necessarily mean the biggest or most politically powerful countries. Switzerland for example is only a small country but is a major player in the financial markets because of the global importance of the Swiss banks.
90% of the funds traded on the forex markets are accounted for by 6 major forex pairs. These are:
- EUR/USD: the euro and US dollar.
- the British pound and US dollar, nicknamed Cable because it used to be synchronized on both sides of the Atlantic by a cable running under the ocean: GBP/USD
- USD/JPY: the US dollar and Japanese yen.
- CHF/USD: the Swiss franc and the US dollar.
the Australian dollar and US dollar: AUD/USD
the US dollar and Canadian dollar: USD/CAD
It is best to stick with the major forex pairs in the beginning. But traders do get involved in other combinations of these major currencies that include other countries such as the New Zealand dollar.
According to a 2007 study, the US dollar is the most significan single currency and is involved in 85% of trades. The euro is second at 37%. Next come the yen, pound, Swiss franc, AUD and CAD in that order. Because there are always two currencies in every trade, these add up to more than 100%
For a Beginner, What Is The Best Currency Pair?
If you are just starting out in forex, most experts advise beginning with the EUR/USD pair. This is because there is a lot of information about these currencies and the high liquidity results in a smaller spread, so your costs will be lower.
Unless they have special knowledge, most newbies avoid some of the other currencies because they have particular characteristics which make them unpredictable. For example Canada is an oil exporter so the value of the Canadian dollar is strongly influenced by the price of oil. Because Japan is a large consumer and importer of oil the Japanese yen can also be affected by the price of oil in the opposite direction.
The best thing to do when you are starting out is probably to take the EUR/USD market and stay with that for the first few months at least. Most new traders would choose the GBP/USD out of the major forex pairs for the second choice. You will not want to get involved in a lot of different currencies when you are starting out. - 23200
Theoretically you could trade any two currencies of the world, but in practice most foreign exchange trading is limited to the currencies of the larger financial powers. This does not necessarily mean the biggest or most politically powerful countries. Switzerland for example is only a small country but is a major player in the financial markets because of the global importance of the Swiss banks.
90% of the funds traded on the forex markets are accounted for by 6 major forex pairs. These are:
- EUR/USD: the euro and US dollar.
- the British pound and US dollar, nicknamed Cable because it used to be synchronized on both sides of the Atlantic by a cable running under the ocean: GBP/USD
- USD/JPY: the US dollar and Japanese yen.
- CHF/USD: the Swiss franc and the US dollar.
the Australian dollar and US dollar: AUD/USD
the US dollar and Canadian dollar: USD/CAD
It is best to stick with the major forex pairs in the beginning. But traders do get involved in other combinations of these major currencies that include other countries such as the New Zealand dollar.
According to a 2007 study, the US dollar is the most significan single currency and is involved in 85% of trades. The euro is second at 37%. Next come the yen, pound, Swiss franc, AUD and CAD in that order. Because there are always two currencies in every trade, these add up to more than 100%
For a Beginner, What Is The Best Currency Pair?
If you are just starting out in forex, most experts advise beginning with the EUR/USD pair. This is because there is a lot of information about these currencies and the high liquidity results in a smaller spread, so your costs will be lower.
Unless they have special knowledge, most newbies avoid some of the other currencies because they have particular characteristics which make them unpredictable. For example Canada is an oil exporter so the value of the Canadian dollar is strongly influenced by the price of oil. Because Japan is a large consumer and importer of oil the Japanese yen can also be affected by the price of oil in the opposite direction.
The best thing to do when you are starting out is probably to take the EUR/USD market and stay with that for the first few months at least. Most new traders would choose the GBP/USD out of the major forex pairs for the second choice. You will not want to get involved in a lot of different currencies when you are starting out. - 23200
About the Author:
T. O'Reilly has worked at forex trading for two yearsand is up to $363 per day. Find out how you can tooforex pairs. Visit http://daytradingthecurrencymarket.com
posted by X - Men @ 4:55 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home