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The Best Currency Pairs for Beginners
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[QUOTE="Forex92, post: 221398, member: 71479"] What currency pairs to trade on the Forex market? Some of them trade all currency pairings in the trading terminal, which is improper. The best currency pairs to trade for novices and those to avoid are discussed today. [B]A Currency Pair[/B] According to ISO 4217, each currency can be shortened to three letters. This standard chooses the first two letters of the currency abbreviation and the last letter of the currency denomination. For example, the US dollar USD is made up of the country's initials USA and the currency's name Dollar. But there are exceptions. For example, the Mexican peso (MXN). MX stands for Mexico, but N stands for the currency's name. [B]Major Forex currencies and their abbreviations:[/B] [LIST] [*]USD – US dollar; [*]EUR – euro; [*]GBP – British pound; [*]CHF – Swiss franc; [*]JPY – Japanese yen; [*]AUD – Australian dollar; [*]NZD – New Zealand dollar; [*]CAD – Canadian dollar; [*]RUB – Russian ruble; [*]CNY – Chinese yuan; [*]MXN – Mexican peso, etc. [/LIST] A currency pair is made up of two currencies that represent the market's price ratio, or exchange rate. Buying one currency on Forex means selling another. The base currency is the first in the pair, while the quoted currency is the second. In the EURUSD currency pair, the euro is the base currency and the US dollar is the quoted currency. The EURUSD rate displays how many dollars 1 euro buys. By buying EURUSD, you buy euros by paying in dollars. With a sell order, you sell euros and receive dollars. The ISO decides which currency is the base and which is quoted. [B]Currency Pairs Types[/B] Currency pairs are classified as major, minor (cross-currency), and exotic. The most liquid currency pairs account for about 80% of trade volume on the foreign exchange market: [LIST] [*]EURUSD; [*]USDJPY; [*]GBPUSD; [*]AUDUSD; [*]USDCHF; [*]NZDUSD; [*]USDCAD. [/LIST] As you can see, the US dollar is the common denominator, with other currencies representing Eurozone and US trading partners for natural resources and technologies. Minor or cross-currency pairs are formed by removing the US dollar from the list of major currency pairs and crossing them: [LIST] [*]EURGBP; [*]EURAUD; [*]GBPJPY; [*]CHFJPY; [*]NZDJPY; [*]GBPCAD; [*]EURJPY; [*]CADJPY; [*]EURCAD; [*]GBPCHF. [/LIST] Due to their illiquidity, exotic currency pairs have huge spreads. Sveriges Riksdag (Sweden) vs. Riksdag (Norway) [LIST] [*]USDSEK; [*]USDNOK; [*]USDRUB; [*]EURTRY; [*]USDTRY; [*]USDSEK; [*]USDDKK; [*]USDZAR; [*]USDHKD; [*]USDSGD; [*]USDMXN. [/LIST] These are not exhaustive lists. You'll likely see more minor and unusual currency pairs on your Forex trading software. If you are still undecided, see our ranking of Forex brokers for 2020. [B]Beginner Currency Pairs[/B] I advise new traders to trade just large currency pairings because they have a low spread and are easy to evaluate and predict. Initially, it is best to concentrate on two or three currency pairs rather than being showered on all. If something goes wrong, you may promptly close the purchase and your deposit is protected from small drawdowns. With practise, you can connect cross-currency pairs like EURJPY, GBPJPY, and EURGBP, but keep in mind that their high spread makes them unsuitable for scalping. I advise against trading exotic currency pairs. They are for seasoned traders. Their spread and swap are higher. They can only be traded for informative purposes or during a long-term price movement. [B]This is a list of the finest currency pairings to trade for beginners and experienced traders.[/B] The EURUSD currency pair is the most liquid and most traded in the Forex market. According to the latest BIS data, EURUSD accounts for 23% of total daily trading activity in the Forex market. Due to the volume of trading and money involved, EURUSD has the lowest spreads in Forex. The EURUSD intraday trading range is 100 pips. [B]Euro-dollar characteristics:[/B] Average daily trading range: 90-100 pips; Best trading times: 06:00 – 16:00 GMT. Factors influencing the EURUSD pair include: Eurozone sovereign debt difficulties (Greece, Ireland, Portugal, Italy, and Spain); ECB interest rate adjustments/statements; US Federal Reserve interest rate adjustments/statements. Crude oil prices (USD) Trading EURUSD Traders of all levels can trade EURUSD. For day trading, scalping, and intraday trading, the EURUSD has a reasonable intraday range. Technical and fundamental analysis can trade EURUSD. It trades heavily in the London and New York sessions, making it ideal for reacting to major US and Eurozone news releases. Always check the economic news calendar for updates. Keep an eye on the EURUSD currency correlations. It is correlated with GBPUSD and USDCHF. These charts may reveal EURUSD arbitrage opportunities. [B]USDJPY - Dollar/Yen[/B] According to the Bank for International Settlements, USDJPY is the second most traded currency pair on the Forex market (BIS). There are three decimal places for five-digit brokers and two for four-digit brokers. [B]Currency pair USDJPY characteristics:[/B] Average daily range: 50-100 pips; Best trading time: 00:00 – 09:00 GMT. Affected by the NFP and big US retail sales (New York Session). The USDJPY is influenced by the following factors: The Bank of Japan's foreign exchange interventions; QE announcements; US trade and employment news, such as the Non-Farm Payrolls and Major Retail Sales reports; Prices of crude oil; New Zealand's natural disasters [B]Trading USDJPY[/B] Beginners should not trade USDJPY until they have some demo trading experience with JPY news releases. Swing and position traders can trade USDJPY. USDJPY has low daily ranges. Range trading is not recommended while the currency pair is consolidating. [/QUOTE]
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