Which is the best currency pair to trade for beginners?

Hello readers! Forex beginners often don’t see anything special about the currency pair EUR/USD, or even worse, they start trading any currency pairs.

Unfortunately, choosing a currency pair isn’t as simple as it seems. Rules and characteristics exist; they are inherent to each currency pair. The main things that we have to pay attention to when we are choosing a currency pair is: the volatility, the predictability of the pair and other characteristics.

I suggest to check the most popular currency pairs, and then choose a few that fits best for you.

EUR/USD

This currency pair is the most traded in the world because of its liquidity and tight spread. However, despite its popularity, EUR/USD is very volatile and unpredictable. At first sight, this pair seems very simple. A lot of banks, funds, financial institutes and professional traders trade this currency pair, therefore it can be difficult to predict and can change movement several times a day.

The EUR/USD volatility (movement) can be about 50-100 points during one trading session, however, movements of 300 points in one session are also possible. The best way to trade this currency pair is to use a trend following strategies. EUR/USD is not the best option for beginners.

Predictions of the movement of the EUR/USD from various financial organizations are usually inaccurate and often contradict each other.

GBP/USD

Among Forex traders, it’s referred to as “Cable”. This pair is popular because of its very straight and strong movements. The GBP/USD is rather sensitively to important news affecting the EUR/USD, with news such as FOMC, Non-Farm Payroll and political events in the UK.

The GBP/USD usually deceives traders that a support has been broken or there is a resistance level and tends to trigger out stop-losses. Therefore, traders must take this into account when making trade decisions. This pair also creates strong signals before a trend begins, therefore, it’s suitable for traders who like to do short-term trades or use martingale type robots. It sometimes appears that GBP/USD has similar movements to EUR/USD and is traded together. However, when one least expects it the pairs can start moving in an entirely different direction.

For beginners this currency pair is of medium difficulty, therefore a lot of precautions need to be made when trading this pair. However, this pair is more suitable for long-term trends.

USD/JPY

This is the second most popular Forex pair. A lot of traders consider the USD/JPY to be the most unpredictable of all the pairs. This pair can move in a completely unpredictable way at any moment and it can bring an unexpected profit or loss to your account. However, for those who know this currency pair very well it can be very profitable.

It’s worth mentioning that USD/JPY is rather sensitive to fundamental events from around the world (especially in USA and Japan) and is strongly affected by USA dollar related news.

It’s not easy for beginners to trade this pair. However, when we already know its dynamics and how it moves, there can be opportunities. It’s important to know that if USD/JPY has a simple uptrend movement it usually moves without big corrections.

Forecasting from various banks and financial centers about this pair’s movements are mostly inaccurate.

USD/CHF

This is considered to be a major Forex pair. However, it can be difficult for traders who trade using just technical analysis. Sometimes one can observe long movements to both sides, but often this pair follows the EUR/USD in the opposite direction. However, it tends to flow better than the EUR/USD.

Beginners can analyze this currency pair, to help them determine the movement of other pairs. For example, sometimes the USD/CHF will break through an important support/resistance level and other currency pairs will then move in the same direction, but with a little delay. Because the USD/CHF usually can appear as though it has broken through a significant level, and a trigger a lot of stop-losses for it then to retrace.

This pair is more predictable than others as described above. Therefore, it’s suitable for beginners.

AUD/USD and NZD/USD

These two pairs are similar by their movements and are stable. In Forex slang they are refer to as the ‘Aussie’ (AUD/USD) and ‘Kiwi’ (NZD/USD). These pairs are suitable for technical analysis because they have slow and calm movements. Therefore, when trading them it is worth getting to know the opinion of market analyzes.

The dollars of Australia and New Zealand are sensitively to metal prices and weather conditions in Australia. Therefore when there’s severe weather conditions (drought, fire, floods, and hurricanes) in Australia, and when metal prices are falling, the AUD/USD and NZD/USD usually declines. However it’s not affected when the weather conditions are good.

These pairs are popular with a lot of traders and forecasters too. For beginners these pairs are recommended, however one must pay attention to technical analysis and also to the price of metal and the weather conditions in these regions.

When there’s an ordinary trend, the corrections are characteristic of these pairs become more obvious.

USD/CAD

This pair in forex slang is referred to as the “loonie” due to duck that is represented on a 1 Canadian dollar coin. This pair is sensitively to changes in oil prices. When oil price appreciate the Canadian dollar also tends to appreciate. And visa verse. Due to this pair not being very volatile it’s suitable for technical analysis. However, trends don’t move as nicely and it can sometimes have unpredictable movements, therefore, it’s also good to take into consideration trends in the price of oil.

It is recommended for beginners to trade this pair carefully.

American analysts seem to do best in predicting the movements of this pair.

EUR/GBP

This is viewed as the least volatile of all the pairs. If you are going to analyze EUR/GBP on a daily (D1) chart in great detail you will see that usually the daily chart doesn’t exceed more than several points, and when studying a weekly chart (W1) there are cases that the pair did not go beyond a channel of 10-20 points.

However, it is important to know that the price of this pair per pip is considerably bigger. Therefore, even a small movement can affect your account.

This pair tends tp be easier to predict the trend, however one has to take in consideration there can be big spikes.

This is a pair suitable for beginners, however one should not forget that it can sometimes be unpredictable.

EUR/JPY

Similar to the USD/JPY, this currency pair is more difficult to forecast, and is more volatile, consequently It’s more popular among professional traders (in one session a pair can easily move 200-300 points, sometimes even 600).

For beginners this pair isn’t suitable due to the huge movements. Therefore, small stops are quickly triggered out. Various fundamental factors must be considered when trading this pair, also banks and various financial institutions rarely analyze this pair, and only obvious trends can be predicted.

GBP/JPY

This pair is regarded as even more unpredictable and risky than EUR/JPY. This pair usually has big  movements and is regard as one of the most volatile pairs.

This pair is not recommended for beginners.

CHF/JPY

This pair is a lot easier to predict and can be suitable for trading. Experienced traders use the EUR/JPY for this pair analysis due to it’s similarities, and it’s movements are usually duplicates in the CHF/JPY  but it tends to move a bit faster and earlier. Therefore, professionals often use a shorter time period so that they would be on time to make a successful trade, and they usually win because of that.

This pair is suitable for beginners.

EUR/AUD, GBP/AUD, GBP/NZD

These currency pairs have the following characteristics:

Huge movements (200 – 400 points) are usual and the price can fluctuate considerably.

An obvious trend can last for a long time.

Larger spreads.

These currency pairs are not recommended for beginners.

EUR/CHF and GBP/CHF

In some traders’ opinions, EUR/CHF is the most suitable currency pair for beginners. It’s movements are not big, and in the long term it moves slowly with the trend.

However in my opinion, when analyzing this currency pair there are sometimes unpredictable and sudden impulses which can quickly hit your stop-Loss orders.

GBP/CHF pair usually follows the same course as the EUR/CHF. However, it can sometimes move unpredictable. It’s rather difficult to trade this pair, yet it’s interesting because the pair can move quite quickly.

GBP/CHF is not the best option for beginners, because of the large spread and volatility.

USD/RUB

There are a lot of traders (even beginners) who like this currency pair and try to trade it.

The Ruble is difficult, because it depends on a variety of fundamental factors such as oil price and common Russian economic status, etc.

Another problem is the spread for this pair is very wide and changes quickly depending on the economic situations and can sometimes be a tremendous 30-50 pips wide.

This currency pair is strongly not recommended for beginners.

 

So which currency pair should a beginner choose?

There are no right or wrong answers to this question. Whether a pair is suitable for a trader depends on their personality and strategy. Therefore, we have to decide which pair suits us best.

A common recommendation for a beginner is to choose from the EUR/GBP, USD/CAD, AUD/USD, NZD/USD and USD/CHF. These pairs are suitable for analysis, trends are more visible, and the characteristics of each pair are seen well.

It is easier to say to which currency pairs one should not trade – which we were discussing in this post.

One more suggestion for beginners – do not open more than two-three pairs at once. It is better to learn one currency pair and get to know its behavior well.

 

Thank you for your attention and take care.