By the end of this article, you’ll know which of the three best currency pairs to trade and what the most important things are which cause volatility in the currency market. There are many pairs of currency to choose from, as you can see here with many markets comes many opportunities because the currency market are nearly continuously open.
It allows the trader to focus upon currency pairs which suits their own personal circumstance and work life balance. There are different economic drivers for different currency pairs for example, if you like to trade Commodities like oil, you may like currency pairs which are linked to oil trading. Currency pairs are highly technical in nature and favored by technical analysts, if you need to know more about technical analysis then this blog will help you a lot.
Four major world currencies
The POUND the US dollar the EURO and the Japanese YEN, you should always aim to trade currency pairs which is one of these currencies within them basics Forex and currency trading use Interchangeably and mean the same thing.
The currency displayed on the left is the best currency, so if you see this pair with the pound on the left and the US dollar on the right. The currency pair is known cable, you know the base currency is the pound. The currency on the right is called the counter currency or you’re betting on is whether or not the base currency will strengthen or weaken against the counter currency. For example if you think the pound or strengthened against the US dollar an increase in value then. You would go long, however if you think the pound will weaken against the US dollar and you would go short traders often ask us well. They should learn to understand what moves the currency market and although it depends on the specific pair they want to trade one. Thing is for certain central bank’s are key to currency movements so let’s have a look at those.
4 major world central bank’s
We’ll look the federal reserve in the united states has major influence over currency pair involving the US dollar and beyond FOMC. Meeting held 8 times PA a particular focus is placed upon key interest rate decisions.
European central bank:
The European central bank is similar to the federal reserve and the regular meetings are a major global event for currency trade. These events are especially important, if you are a currency pair contents the euro make sure you familiarize yourself with these meeting.
Bank of England:
The bank of England is the central bank based in London meetings, irregular an inflation rates are especially important to the bank of England, as it sets an annual benchmark and target to keep inflation at a set figure deviation away from this figure can trigger intervention. Including winter’s rate rises and falls which cause volatility of the currency pair With the pound in them.
Bank of japan:
The bank of japan meets around 12 times per year and carries out many of the same functions as of the central bank. We’ve mentioned anyone based in the UK in Europe should take note of when the meeting will occur and consider their trades and the exposure. If they are trading any currency pair containing the N especially during the unsocial hours in which the N trades.
Top three currency pairs
The top three currency pairs would like to look for opportunities upon the currency pairs that are traded the most. There’s a reason they are traded the most because they are the best trade we’ve. They’ve been traded the most it means they’re the most liquid, meaning less risk of big gaps and not being filled by a broker and you’ll also receive a tighter spread from your broker. The pair’s offer near 24/7 trading and there are key events most trading can be around for including the foot see in European open as well as a US open and close. So let’s look at the reason some of these pair are also popular over the past couple of year’s euro USD. Traders have made great Profits from buying the lows and selling the highs of this range around makes all they’ve had to do is wait for the market to come down to the lows and go long and wait for it to come down to the highs and go short and then be patient and disciplined and hold their trades. Traders of the dollar yen have taken advantage of a longer term uptrend where they’ve bought from the lows and held the market as it’s made continuous higher Highs over the month, thus increasing their profit cable traders have benefited from two distinct periods of momentum. Here in this uptrend
where we can see many green candles indicating higher closes and here where we can many web candles which are indicating lower closes. There are two clear distinct patterns here a strong uptrend and a strong downtrend and traders took advantage of the technical indications in decency these trends were occurring and also continuing have made great profits.
To summarize stick with the main pairs the big three euro, USD USD JYP and GBP USD are three pairs we recommend starting with and continuing our trading with avoiding trading minor or obscure pairs of these currencies will be less liquid mass subjective volatility in the news less technical and higher risk a trade the currency pair. We’re able to monitor and understand central bank whether the federal reserve the European central bank the bank of England or the bank of japan. There many traders who make a living from just trading, one of these three pairs so at most remember you only need to master three pairs don’t worry about what’s happening on the rest.