Forex is the currency market, leading in trading volume and undoubtedly the most liquid in the world. It operates 24 hours a day on weekdays, providing thousands of investors from around the world with the opportunity to participate in a variety of transactions.
The first question anyone who comes to this platform asks is: “What are the best currency pairs for trading?” We’ll cover that in this article.
Best currency pairs: analysis of the main ones
There’s no specific list of all major currency pairs. When referring to them, we’re talking about “duets” of the most liquid and popular currencies. For example, the euro with the dollar, the dollar with the yen, the pound sterling, the Swiss franc, the Australian or US dollar, and so on.
The main feature of such currency pairs is low spreads, which benefits investors. Furthermore, currencies as assets are highly volatile, due to the moment-by-second fluctuations in trading volumes between different countries. The exchange rate difference can be enormous in a single day.
Does this mean that the best currency pairs for trading are major ones? Not always, as traders can both make and lose money on their fluctuations. But this year, experts recommend paying particular attention to this group of instruments. Find out why below.
What do financial experts say?
Economists and experienced Forex traders advise focusing maximum attention in 2022 on the most popular currency pairs that have proven profitable and stable in the past. The global crisis is creating new risks for financial industries, and experimenting with them today is very dangerous, according to experts.
Therefore, the best solution would be to invest in EUR/USD or USD/JPY. You can also short GBP/USD, but be aware of the extremely high volatility of this currency pair. The charts show an increase in the asset’s popularity and demand, which will, of course, impact the price.
Binary options or exotic pairs?
Of course, if you’re really keen to trade exotic pairs, it’s worth exploring options. The key is to exercise extreme caution and follow technical analysis. Some analysts tend to call such trading as risky as binary options, but with the right tactics, all worries can be safely dismissed. There are many options: GBP/SGD, USD/CLP, or EUR/MXN. But just because such instruments exist doesn’t mean you should necessarily use them. Use only those assets that show stable chart patterns and are compatible with your investment strategy.
When is the best time to trade?
Forex traders say the first three hours after the start of trading are the best time to trade currency pairs. Sharp movements are also often observed in the first and last five minutes of each new hour.
At the same time, the worst time to place currency trades is considered to be the market opening period, which is midnight. The highest risk of losing funds remains until 2 a.m. After this time, you can safely begin trading.
Conclusions
This year, the Forex market is facing ever-increasing challenges: waves of the coronavirus pandemic, military conflicts, a decline in production, and an energy crisis. All of this impacts currencies. Therefore, the major currency pairs have been identified as the best for scalping and other manipulations. They are stable and more predictable than minor or exotic pairs. According to forecasts, these recommendations will remain relevant for quite some time.
