What Currency Pairs To Trade?

Are you being patriotic and trading currency from your country of origin? Is that the best way to select the currency pairs to trade? Definitely not.

It is surprising that so many new trades select pairs based on their geographical location. For example an Australian would trade AUD against USD , NZD or even JPY. Someone in Switzerland would be more inclined to trade towards CHF against USD and EUR.  Somehow traders believe that their geographical location gives them an advantage over others regarding certain pairs. How much of it is true?

The criteria of choosing a currency pair should be its liquidity, volume and average trading range. A higher value of all three parameters is most desirable. Based on these criteria our choice of pairs are EUR/USD, GBP/USD, USD/JPY, EUR/JPY, CHF/JPY, USD/CHF and USD/CAD

Another important criteria to consider is Spreads. Spreads varies from session to session and broker to broker.  If you trading in Asian session then you would find that USD/CAD would have higher spreads compared to US session. So if you are a scalper or your profit target is usually small then wider spreads can take a good chunk of your profits. It is wise to monitor the spreads and analyze to see if they fit your trading style in your preferred trading time zone.  You many also perhaps want to consider a commission based broker who offers tighter spreads.

Chris Farnworth is an independent Forex and Commodity trader with many years’ experience under his belt. He travels and works from around the world trading and writing content for various websites and blogs. In his spare time he enjoys scuba diving and surfing.

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3 Responses to “What Currency Pairs To Trade?”

  1. Casey 7 July 2009 at 1:35 am #

    Good article, Whatever pair you decide to trade make sure your monitor and research that pair. Every pair has different tendancies to look out for.

  2. Mr Dee 23 July 2009 at 9:42 am #

    i read lots of good articles on forex trading but i still find it difficult to make good profit to make me a full time trader , please i need help i n this regard

  3. masbudi 4 August 2009 at 1:03 am #

    artikelnya bagus cuma aku nggak donk karena minim english legue

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