6 Best Currency Pairs to Trade in 2024
Best currency pairs to trade:
EUR/USD - best for volatility trading.
USD/JPY - best for trading in the Asian session.
GBP/USD - best for trading a defensive asset.
AUD/USD - best for trend trading.
The Forex market is the world’s biggest and most volatile trading market. Due to the many currency pairs, many traders have difficulty knowing which currency pair is most profitable in Forex. Our experts have done all the research to make it easier for you. This article will help you figure out the best Forex pairs to trade. Using the information presented in this piece will improve your Forex trading performance.
Start trading Forex right now with RoboForex!What are Currency Pairs?
Before we dive into the nitty-gritty about the best Forex pairs to trade, it is crucial to understand the basics of Forex currency pairs if you are a beginner.
Currency pairs refer to trading pairs combining two different national currencies valued against each other. In other words, they refer to the price of one currency in terms of another currency. It is the amount you must pay in one currency for 1 unit of another currency. To illustrate, suppose one chooses to trade the British Pound against the American Dollar, and it's quoted at 1.26. It means that for every GBP (commodity) you exchange, you will get 1.26 USD (price).
The order in which the pairs are listed is important. The first listed currency in a pair is the base currency, while the unit listed after that is the quote currency. Using the above example, it would be the GBPUSD pair. The British Pound is the base currency since it is traded against the American Dollar. It will appear as GBPUSD or GBP/USD. Conversely, if the American Dollar is traded against the British Pound, it will appear as USDGBP or USD/GBP.
The GBPUSD, USDGBP, and similar symbols are called currency pair ‘tickers’ or codes, as stipulated by ISO regulations, and are used to label pairs in the Forex charts when trading. In the Forex market, currency pairs obey one basic rule. Only two currency units can be paired at a time for trading; one is bought while the other is sold.
Now that you know the basics about currency pairs, we will discuss how they are grouped in the Forex market. But, before going into that, you also need to understand the concepts of direct and indirect currency pairs or quotes.
The foreign currency is listed as the base currency in a direct quote, and the domestic currency is listed as the quote currency. That means a direct currency quote shows what amount of the domestic currency is required to exchange 1 unit of the foreign currency. For an indirect quote, the domestic currency is expressed in terms of the foreign currency. In most cases, the USD is the foreign currency, but there are exceptions, which we will explain in the next section.
Currency Pairs Classification
Understanding the types of currency pairs is critical because you’ll need that information to choose your trading strategy. There are several currency pairs for trading in the Forex market. But they fall under three main categories: major, crossed, and exotic.
Major Currency Pairs
Major pairs are the most popular and widely traded pairs. They are the largest in terms of volume traded per day and liquidity. Most traders consider them the major drivers of the global Forex market. The major pairs include:
EUR USD
USD JPY
GBP USD
USD CHF
USD CAD
AUD USD
NZD USD
Notice that major pairs include the US dollar listed as the ‘base’ or ‘quote’ currency. This is so because the USD is the leading reserve currency and the most traded globally. Compared to all the major trading pairs, the EURUSD is considered the most popular among speculators due to its substantial daily exchange volume.
Crosses
Crossed pairs, sometimes referred to as minor currency pairs, have high liquidity but lower trading volume than major currency pairs. Because these pairs have higher spreads, they are less appealing to Forex traders. Another important difference is that they do not include the USD. Instead, the most popular ones include the GBP, EUR, or YEN. You can also find currencies like the CHF, AUD, CAD, and NZD in this group. The complete list of crosses includes:
AUD CAD
GBP CHF
EUR AUD
AUD NZD
EUR NZD
EUR GBP
AUD CHF
GBP JPY
EUR CAD
CAD JPY
GBP AUD
EUR JPY
AUD JPY
NZD JPY
EUR CHF
Exotic Pairs
Exotic currencies are seldom traded on the Forex market and are not widely used in financial transactions globally. Exotic currency pairs consist of a major currency (e.g., USD, GBP, or EUR) paired with a currency from developing economies like Turkey, South Africa, Mexico, and Singapore. These pairs offer higher profit potential but carry a high measure of risk due to large spreads, low liquidity, and low market depth. Examples include:
EUR TRY
USD HKD
JPY NOK
USD RUB
GBP ZAR
USD MXN
What Are the Best Currency Pairs For Trading?
The Forex market is buzzing and is the most traded market globally. Every day, people from all parts of the world trade between currency pairs of two countries for profit. Suppose you are a beginner at Forex trading. You may be confused by the vast number of currencies available for trading, and you may be skeptical about which ones to choose.
Apart from your desire to make money, you are probably aware of the risks associated with trading the volatile Forex markets. To give you a soft landing in the Forex space, we will provide helpful tips to guide you on which currency pairs to trade.
The best currency pairs will depend on three key factors: experience, risk appetite, and trading plan for any trader. For a beginner with minimal trading experience, we suggest sticking to trading only major currency pairs until you have gained a better understanding of the Forex market. Here's why.
The major currency pairs comprise the currencies of the most developed, robust, and stable economies. The US dollar, a primary component of major currency pairs, is the most dominant and strongest currency, accounting for 72.87% of global trades. And according to statistics from our research, other currencies that consume bigger chunks of trading volumes are the Euro (39.67%), Japanese Yen (25.73%), British Pound (20.70%), and Australian Dollar (14.22%). So it makes sense to choose pairs with the US dollar alongside any currency from the major's list because they have the highest liquidity, good spreads and are the most heavily traded currencies.
However, it does not mean that trading these pairs carries no risk. You still need to have a trading plan and a reasonable understanding of how the Forex market works to ensure your trading success. Next, we will consider 6 of the most reliable currency pairs for beginner traders.
Top 6 The Most Traded (And Best) Currency Pairs
The Forex market is active 24 hours a day, five working days a week, with a wide range of Forex currencies to trade. To succeed with Forex trading, you need to understand these pairs deeply. Earlier, we stated that choosing pairs from the major currencies is the best option for trading, especially if you are new to Forex. We have provided a brief profile of the six most traded currency pairs to help you make the right call.
EURUSD
The EURUSD pair accounts for 28% of daily Forex trades, making it the most traded currency pair on the Forex market. This is expected considering the pair represents the two largest economies globally, the United States and Europe. For beginners, stability and liquidity are two key factors to consider when trading. Unlike other currency pairs, there aren’t so many big price swings when trading EUR/USD.
USDJPY
The next most traded currency pair after the EURUSD is the USDJPY. As it is otherwise known, the ‘gopher’ represents 13% of daily Forex trades. The USDJPY rate is a standard for the performance of the Asian economy. The pair’s movement also tends to be in tandem with the USDCHF and USDCAD currency pairs due to the presence of the US dollar in all pairs as the base currency.
GBPUSD
GBPUSD, otherwise known as the ‘cable,’ accounts for 11% of all daily trades. The GBPUSD pair tends to move in tandem with EURUSD as they are well-developed markets. This pair is a good option for traders as they represent two of the most stable economies worldwide. The price movements are affected by interest rates stipulated by the Bank of England and the US Federal Reserve (Fed).
AUDUSD
The AUDUSD currency pair, dubbed the ‘Aussie,’ makes up 6% of daily Forex trades. Because the USD is this pair’s ‘quote’ currency, its position is not as strong as the first three pairs. Also, the Australian dollar value is dependent on Australia’s commodities exports. Iron and coal represent a large proportion of Australian exports, and any rise or fall in the value of these commodities influences the price movements of the currency pair. Also, disparities in interest rates set by the Reserve Bank of Australia and the Fed affect the exchange rate.
USDCAD
The ‘loonie,’ as the US dollar-Canadian currency pair is otherwise known, is popular among professionals and beginner traders. The pair accounts for 5% of daily trade volumes in the Forex market. Like the other major pairs, the loonie is a good option for traders because of its high liquidity and better spreads. This makes it suitable for swing trading or day trading. The exchange rate of the USDCAD is influenced mainly by crude oil prices, particularly Brent and US crude.
USDCHF
The USDCHF pair represents the US and Swiss economies. CHF stands for 'Confoederatio Helvetica' Franc, the only Franc still in circulation in Europe. The ‘Swissie,’ as this pair is sometimes called, accounts for 5% of daily global trades. Traders choose this pair in times of increasing market volatility because they expect price drops as the Swiss franc gains against the dollar due to increased investment in the currency. However, it remains one of the least actively traded major pairs.
How to Choose Currency Pairs in Forex Trading
Choosing the right pairs aligns with your financial goals and trading strategy. Here are some steps to guide you through this essential process.
Understand Major, Minor, and Exotic Pairs
In the Forex market, currency pairs fall into three main categories: Major, Minor, and Exotic pairs. Major pairs are the most traded and include currencies like the USD, EUR, and JPY. These pairs offer high liquidity and tighter spreads. Minor pairs involve lesser-known currencies and usually have wider spreads. Exotic pairs typically include a major currency and a currency from a developing economy. These pairs are less liquid and come with higher spreads.
Selecting the right category depends on your risk tolerance. Major pairs are a safer bet for beginners due to their high liquidity. Minor and Exotic pairs might offer higher profits but carry more risk.
Analyze Your Trading Strategy
Your choice of currency pairs should align with your trading strategy. Scalpers and day traders may prefer Major pairs for their lower spreads. Meanwhile, those looking for long-term gains might opt for Exotic pairs, as they can offer larger price swings over time.
Always backtest your strategy with the currency pair you're considering. Ensure that your risk management plan aligns well with your selected currency pair and trading time frame.
Stay Informed
Constantly update yourself on economic news and events that could impact the currency pairs you're trading. Use fundamental analysis to assess how interest rate changes, unemployment rates, or political stability might affect a currency's value. Keep an eye on economic calendars, and follow reliable financial news sources to stay ahead of the game.
Leverage Technical Analysis
While fundamentals provide the broad strokes, technical analysis lets you dive deep into price behaviour. Indicators like moving averages, RSI, or Bollinger Bands can offer insights into market sentiment. If a currency pair aligns well with your technical indicators, it might be a solid pick.
Evaluate Transaction Costs
Each trade comes with a cost, often reflected in the spread. Major currency pairs usually have lower spreads compared to Minor or Exotic pairs. Ensure that the costs won't eat into your profits, particularly if you plan on executing many trades in a short timeframe.
When Is the Best Time to Trade Forex Currency Pairs?
The Forex market operates 24 hours a day, five days a week, and is broken down into four primary trading sessions: Sydney, Tokyo, London, and New York. Each session has unique trading characteristics, influenced by the countries that are active during those hours. Knowing the start and end times of these sessions can help you optimize your trading strategy.
Sydney Session
The Sydney session starts at 5:00 PM EST and ends at 2:00 AM EST. It marks the commencement of the trading week and mainly features the Australian and New Zealand dollars. It's an ideal time for trading AUD and NZD pairs, although it's the least volatile of the sessions.
Tokyo Session
The Tokyo session runs from 7:00 PM EST to 4:00 AM EST. During these hours, currencies like the JPY and AUD become more active. This session experiences a moderate level of volatility and liquidity, making it suitable for traders who prefer a balanced trading environment.
London Session
The London session operates between 3:00 AM EST and 12:00 PM EST. As a significant financial hub, London sees the highest trading volumes. Major currency pairs involving the GBP, EUR, and USD are particularly active, offering numerous trading opportunities.
New York Session
Active between 8:00 AM EST and 5:00 PM EST, the New York session overlaps with the London session for a few hours, typically between 8:00 AM EST and 12:00 PM EST. During this overlap, liquidity and volatility surge, presenting more opportunities but also greater risk. The session also coincides with the release of important U.S. economic data, which can impact currency values.
Where Can I Trade Best Forex Pairs
Having learned about the best Forex currency pairs you can trade, the next task would be to know which brokers to use. With so many out there, scouring for the best one can be overwhelming, and you might end up with a broker that isn't right for you. With this in mind, we have studied many trading platforms to identify the most suitable ones where you can trade the best Forex pairs.
Oanda - Best For Forex Trading in The US
When choosing a broker, it’s crucial to consider brokers registered with the National Futures Association (NFA) and The Commodity Futures Trading Commission (CFTC). Oanda is one of those brokers, and its platform offers clients an outstanding trading experience. With over 26 years of operating in the Forex market, the broker is available to US clients and offers four ways to trade major currency pairs with fxTrade, its primary user-friendly interface.
It also offers beginners real-time news feeds, outstanding research, and analysis tools. If you are only focused on trading Forex pairs, then Oanda is a suitable option as its range of offerings is limited to just 55 CFDs.
RoboForex - Best for international Trading
RoboForex began operations in 2009 and is a leading Forex software developer. Beginners prefer to use RoboForex because of its easy-to-use interface and educational materials. The broker offers floating spreads from 0 pips and leverage as high as 1:2000. With a minimum of 10 USD, you can start trading with this platform.
Summary
Trading Forex currency pairs allows you to make a healthy profit, but your experience, risk appetite, and trading strategy will determine the best pairs to trade. Nevertheless, trading major currency pairs like the EURUSD, USDJPY, USDCAD, etc., is the best option for beginners as they are the most actively traded pairs and have high liquidity.
While Forex trading can be profitable, it is crucial to understand the pros and cons of Forex trading and know how much risk you are willing to take. Our trading recommendations will help you make the best trading judgments.
FAQs
When is the best time to trade Forex?
The best time to trade will depend on the pairs you wish to trade and your time zone. For example, night traders in the US can only trade the American and Asian markets since Europe and the Middle East may be closed.
How can I choose the best Forex broker?
You need a broker that best fits your trading needs. The company’s history, deposit requirements, spread amount, trading instruments, educational tools, and reliability are things to consider.
What is the most traded currency pair?
The EURUSD pair represents 28% of daily Forex trades, making it the most heavily traded currency pair on the Forex market. It includes two of the best economies in the world with the highest volume.
What factors affect the choice of a currency pair for trading?
The main factors include liquidity, volatility, spread type, and slippage probability. Based on these factorsThe major currency pairs are the best choice, particularly for newbies.
Team that worked on the article
Rinat Gismatullin is an entrepreneur and a business expert with 9 years of experience in trading. He focuses on long-term investing, but also uses intraday trading. He is a private consultant on investing in digital assets and personal finance. Rinat holds two degrees in Economy and Linguistics.
Gismatullin has been an author at Traders Union since 2019. His focus is creation of detailed reviews of brokerage companies and cryptocurrency exchanges, as well as analytical and educational articles on finance.
Rinat’s motto: Always be open to new experiments. By overcoming the hardships you will reach the stars that open to those who seek.
Olga Shendetskaya has been a part of the Traders Union team as an author, editor and proofreader since 2017. Since 2020, Shendetskaya has been the assistant chief editor of the website of Traders Union, an international association of traders. She has over 10 years of experience of working with economic and financial texts. In the period of 2017-2020, Olga has worked as a journalist and editor of laftNews news agency, economic and financial news sections. At the moment, Olga is a part of the team of top industry experts involved in creation of educational articles in finance and investment, overseeing their writing and publication on the Traders Union website.
Olga has extensive experience in writing and editing articles about the specifics of working in the Forex market, cryptocurrency market, stock exchanges and also in the segment of financial investment in general. This level of expertise allows Olga to create unique and comprehensive articles, describing complex investment mechanisms in a simple and accessible way for traders of any level.
Olga’s motto: Do well and you’ll be well!
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.