Best Currency Pairs To Trade Forex - TU Research

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Summary

Forex market offers hundreds of trading instruments, including currency pairs, to the traders. Having such variety, it is very difficult for novice traders to make the right choice in favor of a specific currency pair. Some traders claim it is best to trade EURUSD, because this is the most liquid pair. Others prefer more volatile, the so-called exotic currency pairs. A lot of speculations regarding this issue have been published in open sources, but there is no definitive answer to the question of which currency pairs are best for successful trading in the Forex market. To find a reliable answer to this question, the team of Traders Union analysts conducted an expert research and learned which currency pairs successful traders prefer to trade in the Forex market. The answer to the question of the research is very important, as it will help other traders, including the beginners, to borrow the experience of their successful colleagues. Therefore, every trader will be able to choose the best suitable trading instrument (currency pair) to trade successfully in the Forex market.

In order to obtain a trustworthy answer to the question of the research, the team of TU experts conducted a survey among 2,500 experienced Forex traders, working with the brokers from the TOP 10 of the TU rating. As a result of the survey, TU analysts were able to obtain reliable results that show the experience of successful traders, and to determine the best currency pairs for successful and profitable trading in the Forex market.

The best Forex currency pairs for profitable trading.

TU research also provides answers to the following questions:

  • What are the groups of currency pairs in the Forex market?

  • Which currency pairs are most frequently chosen by successful traders?

  • What do I need to take into consideration when choosing a currency pair to trade?

  • What kind of risks do I need to consider when trading less liquid and highly volatile currency pairs?

The results obtained by the TU experts are based on reliable and unbiased data, studied in the course of a comprehensive research. Therefore, the traders from all across the world will be able to apply them when choosing currency pairs to work with in the Forex market.

Glossary

  • Forex is a global financial market for exchanging currencies. The participants of Forex trading include central banks of different countries, companies, top international businesses, commercial banks and private traders.

  • Forex broker is a financial services company performing the function of an intermediary between the buyer and the seller of currency in the Forex market.

  • Trade deposit means the funds deposited by a trader to his/her account with a Forex broker with the purpose of performing trading transactions.

  • Volatility is a term used to describe fluctuations of trading prices within a specified period of time. It is believed that the higher the range of price fluctuations, the higher the volatility.

  • Liquidity is an economic term denoting the capability to quickly buy or sell an asset at the price closest to the market price with minimum possible expenses.

  • Slippage is the difference between the expected price of a trade set by the trader and the price at which the trade is executed.

  • Spread is the difference between the best buy price and the best sell price in currency exchange.

  • Trading strategy is a set of rules and algorithms used for making decisions when trading in the Forex market. The trading strategies are based on either technical or fundamental analysis, and there are also combined trading strategies.

  • Currency pair is a trading instrument formed from the relation of prices of two currencies with the value of one quoted against the other. The first currency in the pair is the base and the second one – quote. For example EUR/USD, where EUR is the base currency, which is traded for US dollars (USD).

Opinions available in open sources

Having reviewed the opinions on the selection of the best currency pairs to trade in the Forex market, published in the open sources (tradingview.com, finder.com, sc.squaredfinancial.com, dailypriceaction.com, dailyfx.com, investopedia.com and others), the team of TU analysts established that there is no agreement of opinion on the best currency pairs to trade in the Forex market. Some experts assume that trading currency pairs with high volatility will bring the maximum profit. Others are convinced that trading highly volatile currency pairs carries extremely high risks. Some traders note that liquidity of a currency pair should not be given too much significance, while others claim that volatility is the most important criterion for choosing the trading instrument.

Opinions available in open sources

TU experts have tasked themselves with finding out which opinion on the question of the research is shared by successful traders, trading in the Forex market via the brokers from the TOP 10 of the TU rating, and which currency pairs to choose for profitable trading in the Forex market.

Theoretical part of the research

At the beginning of the research, the team of TU analysts processed statistical data of reliable sources in terms of trading volumes in the Forex market in order to determine the most liquid currency pairs.

According to BIS (Bank for International Settlements), the EUR/USD pair accounts for 27.95% of the total volume of trading in the Forex market. Next follows USD/JPY with 13.34% of the total trading volume. The positions of the following currency pairs are as follows:

GBP/USD — 11.27%, AUD/USD — 6.37%, USD/CAD — 5.22%, USD/CHF — 4.63%, NZD/USD — 4.08%, EUR/JPY — 3.93%, GBP/JPY — 3.57%, EUR/GBP — 2.78%, AUD/JPY — 2.73%, EUR/AUD — 1.8%. The other currency pairs account for the remaining 12.33%.

Picture 1. Trading volumes by currency pairs

Picture 1. Trading volumes by currency pairs

Types of currency pairs

Types of currency pairs

According to the general classification, all Forex currency pairs are divided into the following groups:

Majors.

Minors/Crosses.

Exotic pairs.

  • Majors

    Majors

    The currencies traded at the highest volume against USD make up the group of major currencies together with the US dollar. The currency pairs of this type are the most liquid ones, as the analysis of trading volume data has shown.

    Major currency pairs, with the exception of GBP/USD and USD/CAD, have a moderate level of volatility, not exceeding 100 pips per day. This correlates with high liquidity of these currency pairs. The most volatile pair among them is GBP/USD with an indicator of 131 pips (per trading day). The least volatile pair among majors is USD/CHF with the daily indicator at 68 pips.

    Picture 2. Average daily volatility of majors

    Picture 2. Average daily volatility of majors

    The features of the major currency pairs include:

    High liquidity;

    Moderate volatility;

    Tight spreads;

    Quick order execution;

    Minimum swaps;

    Low probability of slippage.

  • Minors / Crosses

    Minors / Crosses

    Currency pairs, in which the US dollar (USD) is not one of the currencies, are called minors or crosses. The trading volume of these pairs is much lower than the majors, making them less liquid.

    Having analyzed minors volatility data, the team of TU analysts established that their average volatility is higher than that of the majors. As you can see on the chart of the average volatility of crosses below, the most volatile pairs in this group have GBP as one of the currencies. In these crosses, the volatility indicator is ‘confidently’ above 100 pips. The most volatile pair among the minors is GBP/NZD with an indicator exceeding 205 pips. The least volatile currency pair among the minors we analyzed is EUR/CHF with an average volatility indicator at 53 pips.

    Picture 3. Average daily volatility of minors

    Picture 3. Average daily volatility of minors

    The features of the minor currency pairs include:

    Moderate liquidity;

    Average volatility;

    Average spreads;

    Average cost of swaps.

  • Exotic pairs

    Exotic pairs

    The exotic pairs are the currency pairs, which include currencies of developing markets or developed countries with a small share in the global trade. The general feature of exotic pairs is that their trading offers higher profit potential, but also carries higher risks. The liquidity of this group of currency pairs is minimal, as the trading volumes of exotic currency pairs are comparatively low. In terms of volatility of this type of currency pairs, in the majority of cases it is very high, although there are exceptions. Among the exotic currency pairs TU team of experts analyzed, USD/SEK and USD/BRL are undisputed leaders in terms of volatility with an average volatility indicator at 1,127 and 1,006 pips respectively. The USD/TRY pair is not far behind them with 968 pips. At that, USD/HKD is the least volatile pair with the volatility indicator ranging within 26 pips, which is much lower than the indicators of the other pairs, including majors.

    Picture 4. Average daily volatility of exotic pairs

    Picture 4. Average daily volatility of exotic pairs

    The features of the exotic currency pairs include:

    Low liquidity;

    Higher level of volatility on average;

    Wider spreads;

    High cost of swaps;

    Increased slippage risk.

Note:

Traders Union experts would like to warn novice traders against trading exotic currency pairs due to the increased risk and high transaction expenses, possible slippages and sharp price fluctuations.

Results of the research by TU Research Department (*)

To answer the question of which currency pairs are the best for trading in the Forex market, the team of TU analysts surveyed 2,500 successful traders – clients of the brokers from the TOP 10 of the TU rating. All surveyed traders have shown profitable trading for at least one year. The survey was conducted using the CAWI (Computer Assisted Web Interviewing) method. The non-sampling error of the survey with a confidence level of 95% is no more than 2.2%.

6.1 Surveyed traders by gender:

79% men;

21% women.

Picture 6.1. Respondents by gender, %

Picture 6.1. Respondents by gender, %

6.2 The age groups in the sample are as follows:

42% of the respondents are aged 18-30;

36% — aged 30-45;

18% — aged 45-60;

4% of the respondents are older than 60.

Picture 6.2 Respondents by age

Picture 6.2 Respondents by age

6.3 In terms of their trading experience, the composition of the respondents was as follows:

3% of the respondents have been trading on Forex for over 10 years;

25% — more than 5 years;

39% — from 3 to 5 years;

33% — from 1 to 3 years.

Picture 6.3 Respondents by Forex trading experience, %

Picture 6.3 Respondents by Forex trading experience, %

6.4 The average monthly deposit growth for the last 12 months of the surveyed traders is as follows:

4% of traders — up to 15%;

15% of traders — up to 10%;

34% of traders — up to 5%;

27% of traders — up to 3%;

20% of traders — up to 1%.

Picture 6.4 Average monthly return rate of successful traders, %

Picture 6.4 Average monthly return rate of successful traders, %

6.5 The responses of the respondents regarding their trading strategies were as follows:

48% of the respondents use long-term strategies;

52% – intraday.

Picture 6.5. Long-term vs intraday trading strategies, %

Picture 6.5. Long-term vs intraday trading strategies, %

6.6 The responses to the question “Which currency pairs are preferable for trading in the Forex market?” were as follows:

1,978 traders gave their votes for majors;

795 — for minors;

184 — for exotic pairs.

Type of currency pair Votes %

Major pairs

1,978

67%

Minor pairs

795

27%

Exotic pairs

184

6%

Total

2,957

100%

Table 6.1. Distribution of responses by the types of currency pairs

Picture 6.6. Types of currency pairs, votes

Picture 6.6. Types of currency pairs, votes

6.7. Also, the respondents were asked about the main factors impacting their choice of currency pairs for trading in the Forex market (the respondents could choose up to 3 options). The surveyed traders answered as follows:

2,253 respondents voted for high liquidity;

1,569 voted for moderate volatility;

1,044 – for low spreads;

1,212 – for absence of slippage;

764 respondents see availability of news and analytical materials as the key factors for choosing currency pairs.

Factors impacting the choice of currency pairs Votes %

High liquidity

2,253

33%

Moderate volatility

1,569

23%

Low spreads

1,044

15%

No slippage

1,212

18%

Availability of news and analytical materials

764

11%

Total

6,842

100%

Table 6.2. Factors impacting the choice of currency pairs

Picture 6.6. Factors impacting the choice of currency pairs, votes

Picture 6.6. Factors impacting the choice of currency pairs, votes

(*) Survey criteria:

  • Survey audience: Forex traders of the TU community aged 18 and older trading with the brokers from the TOP 10 list of TU rating.

  • The sample is representative in terms of age, gender and Forex trading experience.

  • Sample number: 2,500 respondents.

  • Survey method: CAWI (Computer Assisted Web Interviewing).

  • Non-sampling error of the study with a confidence level 0.95: no more than 2.2%.

  • Period of survey: June 2-3, 2023.

Findings

Based on the results of the research, TU analysts have come to the following conclusions:

  • 1

    The vast majority of the traders choose the major currency pairs group.

  • 2

    The surveyed traders most frequently take into consideration high liquidity (33% of all votes) when choosing currency pairs.

  • 3

    The traders, who prefer long-term trading strategies, use exotic pairs and crosses way more often than traders who prefer short-term trading.

  • 4

    Novice traders trade exotic currency pairs much more rarely than experienced traders.

  • 5

    The results obtained in the course of the research show that the traders with the highest average return rate in the past 12 months choose minor currency pairs more often than other categories of the respondents.

Findings

PDF version of the TU research

For more detailed information on the best Forex trading strategy, download the full version of the research conducted by our team.

PDF version of the TU researchDownload PDF version

What are the best Forex currency pairs for profitable trading | Expert Opinion

There are many currency pairs in the Forex market. Therefore, when choosing a currency pair to trade in the Forex market, it is advisable to determine the acceptable risk level for a trader, which directly depends on the liquidity and volatility of the currency pair. When choosing a currency pair, the following factors also need to be taken into account:

Trading conditions of the broker selected by the trader for each currency pair (spread, commission, slippages, speed of order execution, etc.).

Availability of news and analytical materials related to the chosen currency pair.

Dependence of the strategy chosen by the trader on the risk factor.

After selecting the currency pair, a trader needs to thoroughly test this pair to make sure it corresponds to his/her strategy using a demo account or a live account with minimum trading volumes and leverage. Follow this rule and Forex trading will bring you stable and high profit.


Antony Robertson

Antony Robertson

Traders Union’s analyst trader

The Most Common Forex Pairs by Countries

Team that worked on the article

Chinmay Soni
Contributor

Chinmay is a certified Investment Analyst and Portfolio Manager by the National Stock Exchange (NSE) Academy. He is currently associated with a $75 million VC fund and assists them in identifying and researching investable sectors and start-ups. He has completed his Bachelors of Business Administration from the Institute of Management, Nirma University and is currently pursuing MBA majoring in Finance from the same. He has 4 years of hands-on investment experience in a variety of asset classes and his professional qualifications include being a CFA Level 2 candidate and NSE Certified Market Professional Level 2.

He finds writing as a way to express his thoughts and share his knowledge with people eager to learn. He himself happens to be an avid reader of personal finance books and on top of his recommendation list are the international bestsellers ‘The Psychology of Money’ and ‘Think and Grow Rich’

He has this one strong belief as his motto: Life is what you make of it.

Dr. BJ Johnson
Dr. BJ Johnson
Developmental English Editor

Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.

The topics he covers include trading signals, cryptocurrencies, Forex brokers, stock brokers, expert advisors, binary options. He has also worked on the ratings of brokers and many other materials.

Dr. BJ Johnson’s motto: It always seems impossible until it’s done. You can do it.

Mirjan Hipolito
Cryptocurrency and stock expert

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.