- 1 Forex trading
- 2 What are the best Forex pairs to trade?
- 3 Where to trade forex?
- 4 What do you need to know about the best forex pairs?
- 5 Pros and Cons 😃😔
- 6 Interesting Table: Currency Pair Characteristics 📊
- 7 Conclusion about the best forex pair to trade
- 8 Short Q&A ✅❓
- 9 GENERAL RISK WARNING
Today you will learn about the best forex pair to trade on IQ Option. The currencies exchange market, forex, has become very popular. It offers great possibilities as it is open for a longer time than usual markets. This is because of time differences. So for those who work during the standard trading hours, this might be the option. But this is not the only good reason for choosing forex. There are many currency pairs to convert and here we will discuss the top 6 best forex pairs to trade.
You have to have a general understanding of fundamental concepts related to Forex. Basically, you exchange one currency for another. And so we have, for example, a base currency. Your base currency will be the currency you keep before starting trading.
Then, we have the Bid and Ask prices. A bid is a price you will get for the currency you are selling or in other terms, the market will buy it from you. An ask price is what you get when you are buying so this is the price at which the market will sell a currency for you.
There is also spread which is nothing more than the difference between both, the bid and the ask. The spread often constitutes a commission that brokers take for executing the transaction.
Pip is the slightest movement we can measure that the currency makes.
Leverage is a special tool that not only helps individuals to get into the game but can significantly boost profits. The leverage multiplies the quote that is invested. So if you put $1 into trade and use the leverage 100, you will have $100 invested. It also makes the market available for those who do not have so much money at the beginning. But be careful here, because the leverage works both ways. It may not only increase your gains but also your losses. If you want to learn more about leverage on forex read our article about trading forex on the IQ Option platform.
What are the best Forex pairs to trade?
We have chosen the top 6 currencies based on historical data and their popularity among traders. You will find on the list EURUSD, USDJPY, USDCAD, GBPUSD, USDCHF and AUDUSD.
The best forex pair to trade: EUR to USD
United States dollars converted to euros are the most popular on the Forex. Euro is the currency of the European Union, though not all the members have officially taken it. There are 19 countries with the euro as the official currency. These are Austria, Belgium, Cyprus, Estonia, France, Finland, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
The EURUSD pair will be under influence of the events that have an impact on the dollar or the euro. Make sure you follow the news.
Why is the EURUSD the best forex pair to trade?
The Eurodollar is the most traded currency pair in the world and also the most liquid financial instrument. Take a look at the chart below. I prepared it based on the BIS report on foreign exchange market operations.
The chart clearly shows us the advantage of the Eurodollar over the other currency pairs. Our best forex pair to trade is responsible for 24% of the turnover in the foreign exchange market!
The eurodollar exchange rate depends on many factors. Interest rates set by the European Central Bank and the Federal Reserve play a big role. Of course, there are also a number of other factors. In the EURUSD market, even very large transactions do not cause price shocks. This is because of the huge turnover and liquidity that is generated there.
Number 2: USD to JPY
JPY (the Japanese yen) is Japan’s official currency. It has a long history. Its value diminished after World War II but then began to stabilise after the oil crisis in 1973. The government puts a lot of attention to keeping the value of the yen at some level, so the exchange rates are under control. The yen is known to be a reserve currency (next to the USD, the EUR and the GBP).
Number 3: USD to CAD
CAD is a dollar from the neighbour of the United States, Canada. The value of both currencies is in close relation. Moreover, the CAD is largely influenced by the prices of the oil so follow them if you want to trade the Canadian dollar.
Number 4: GBP to USD
United Kingdom has been a member of the European Union until 2016, nevertheless, it has never changed its currency from the British pound sterling (GBP). And though the GBP still belongs to the most commonly traded currencies (just behind the USD and the EUR), it lost greatly first during the Great Recession and second during the Brexit.
Number 5: USD to CHF
Number 5 is the conversion of the United States dollar to the Swiss Franc, the official currency in Switzerland. The CHF is known as a “safe-haven” currency because it does not behave like other currencies during high volatility times. Conversely, its value rises, when other currencies are losing and it falls when the value of others is rising. (JPY is the second “safe-haven” currency but not to such an extent).
Number 6: AUD to USD
Our last currency comes from Australia and is the Australian dollar. The economy of Australia lies close to that of Canada so the values of their currencies also stay in close relation. Also, remember that Australia is one of the biggest exporters of coal and iron ore in the world so keep an eye on these commodities’ prices.
Where to trade forex?
There are many brokerage companies that allow you to trade forex. We, as fans of IQ Option, sincerely encourage you to trade on this platform. Not without reason of course. Apart from the typical leveraged buy and sell transactions IQ Option offers additional instruments for trading. Here you can trade on popular currency pairs using digital and binary options. In short, options allow you to make a profit by assuming the direction of the price at a time defined by you.
If your prediction was correct you can earn as much as 80-90% of what you invested in the trade. Of course, you can also lose the amount you invested.
IQ Option gives you the opportunity to trade on a demo account. It is worth trying out the available currency instruments in a virtual environment before you decide to invest real money. It is also a good way to become thoroughly familiar with the functioning of the platform and the available instruments.
What do you need to know about the best forex pairs?
It is impossible to trade the entire currency market by trading all available currency pairs at once. It is advisable to focus on a few major currency pairs. It is worthwhile to get to know their characteristics, volatility and macroeconomic events related to them. It is worth observing price behaviour and discovering repeatable patterns that can give you an edge over other market participants. Below we answer some more questions we come across when discussing the best forex pairs to trade.
Which currency pair is most profitable in forex?
Unfortunately, there is no such thing as the most profitable currency pairs. No matter which currency pair you choose, your trading can result in profits or losses. You may come across opinions that EURUSD is the most profitable pair. Is this true? No, it all depends on your strategy and your ability to execute it. Certainly, EURUSD is the pair with the highest trading volume. It is also the pair on which it is relatively easiest to build an effective mechanical strategy. You also know that we think the EURUSD is the best forex pair to trade.
I do not know a trader who does not observe the EURUSD currency pair. This is probably partly why support and resistance levels, trend lines and classic technical analysis formations work quite well on this currency pair. It is also often possible to observe well-drawn candlestick formations on the eurodollar.
However, this certainly does not determine the profitability of trading on this pair. You can also lose on EURUSD
PRO tip: If you have a strategy and want to use it on the currency market, test it on different currency pairs beforehand. Different currency pairs have different volatility and chart behaviour. A strategy which works on the EURUSD might not work as well on, for example, the GBPUSD or the yen pairs.
What is the easiest forex pair to trade?
For me and for many, the number one issue is EURUSD. I think it is the easiest pair to trade on both low and high time intervals. The EURUSD price is great at respecting support and resistance levels and commonly used moving averages such as the SMA200. The EURUSD market is most active during the London and New York sessions, making it possible to trade virtually throughout the day, although the best moves are obviously during the aforementioned trading sessions.
Which forex pair moves the most?
The volatility of currency pairs is not constant. It depends on many macroeconomic factors, world events and financial market sentiment. EURUSD is generally considered to have average, but good volatility. The pair with relatively high volatility is, for example, GBPJPY. If you care about high dynamics of price changes, the pair Pound with Yen will provide you with it. Remember, however, that higher volatility does not mean higher profits. More volatility means more movement. Bigger moves can lead to bigger gains, but also bigger losses.
Pros and Cons 😃😔
|Accessibility and extended trading hours||Requires constant monitoring and analysis|
|Wide range of currency pairs to trade||High volatility can lead to significant losses|
|Leverage can boost potential profits||Leverage can also amplify losses|
Interesting Table: Currency Pair Characteristics 📊
|EURUSD||Most traded and liquid currency pair|
|USDJPY||Popular reserve currency and influenced by Japan’s economic policies|
|USDCAD||Closely related to oil prices and US economy|
|GBPUSD||Impacted by Brexit and UK’s economic policies|
|USDCHF||Known as a “safe-haven” currency|
|AUDUSD||Influenced by Australia’s export industry, especially coal and iron ore|
Conclusion about the best forex pair to trade
The currency pairs we have discussed today are the most popular and account for the majority of trading volume in the forex market. Those are also the best iqforex pairs to trade for beginners. It is advisable to follow these major currency pairs, as they have the highest volatility. These are also the assets on which technical analysis tools work well. So what is your favourite currency pair?
In our opinion, the best forex pair to trade is EURUSD. Do you share our sentiment? Write about it in a comment below the article.
We wish you success in your currency trading!
Short Q&A ✅❓
- Q: What are the most important factors to consider when choosing a forex pair to trade?
A: Factors include liquidity, volatility, trading hours, economic events, and market sentiment.
- Q: Why is it important to monitor news and economic events when trading forex?
A: News and economic events can significantly impact currency values, leading to potential profits or losses.
- Q: How can leverage both help and hurt forex traders?
A: Leverage can amplify both gains and losses, making it important to use with caution.
- Q: Why is the EURUSD the most traded currency pair in the forex market?
A: The EURUSD is popular due to its high liquidity and stability, making it easier for traders to enter and exit positions.
- Q: What role do interest rates play in forex trading?
A: Interest rates set by central banks can influence currency values, affecting forex trading opportunities.
GENERAL RISK WARNING
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