Forex trading involves buying and selling currency pairs. As a trader when you begin to trade you have hundreds of currency pairs available to trade in the trading platforms. Major currencies as United States Dollar, Euro, British Pound, Japanese Yen, Canadian Dollar, Australian Dollar, Swiss Franc, etc, can be traded on the foreign exchange market.
Beginners on forex trading can have difficulties choosing the currency pairs to trade. You can choose to trade financial instruments in your forex broker that have less more volatility. Or you can trade other forex currency pairs that have more volatility and are knowns as “exotic pairs”.
This article will explain the best currency pairs to trade and explain the pros and cons of currency trading.
Trade pairs according to your style
Finding your style of trading and trading strategy as a swing trader, day trader or scalp trader can help you choose the right forex pairs to trade. If you’re a swing trader which means you need to wait hours or days to reach your target, then trading low volatility pairs can be challenging. Forex currency rates with low volatility don’t have a lot of movement in pips.
This may lead to reach the target of your trade on a longer period but ensure the safety of your account, as you trade major pairs. Forex traders with a scalping style of trading can trade both volatile and non-volatile pairs. The reason why volatile and non-volatile pairs are suitable for scalping has to do with the momentum of trading.
As a scalp trader, you trade pairs on shorter time frames that expose more risk for your account. But trading volatile pairs besides the risk of the volatility, can have more advantages on trading currency pairs as you have fewer trades to open.
Forex currency pairs with less volatility are more stable
Forex pairs with less volatility are safer to trade as they have lower movement of pips than volatile pairs. By trading high volatility pairs you will have solid trading experience. The average movement of non-volatile forex currency pairs is 100 pips or less. Some major and cross pairs have an average of 50 pips volatility per day.
Trading forex pairs with less volatility to trade can take hours, days, or even weeks to reach your target. Less volatile pairs are stable on the market, but this may lead by opening more trades which could lead to a potential risk of losing trades. Waiting for a longer time to reach the pips target, can affect your rules and trading plan too.
It’s up to you to decide if trading non-volatile pairs is better than trading volatile pairs. Below we have listed the best forex pairs that are stable and have an average of 100 pips or less volatility per day.
- EUR/USD 70-80 pips
- GBP/USD 90-100 pips
- USD/JPY 55-70 pips
- AUD/USD 50-60 pips
- EUR/GBP 80-100 pips
- USD/CAD 100-110 pips
- EUR/JPY 80-100 pips
- NZD/USD 70-90 pips
Forex currency pairs with more volatility are “uncontrollable“
Volatile forex currency pairs compared to non-volatile pairs have more volatility per day. Some popular currency pairs have volatility up to 500 pips or even more. And trading these volatile pairs can give you more opportunities on the market. Market patterns or price action could occur more often, which would allow you to trade more often and increase your number of trades.
But the highest volume currency pairs are more unstable and could become unpredictable at some point. The high volatility could affect the forex trading volume of the pairs. And on situations with fundamental factors, then volatility could rise even more.
On some major currency pairs, the effect of fundamental analysis factors could push the price with a movement 300 pips, 500 pips, or even more, in a couple of seconds. And for trading these currency pairs requires a high trading balance and higher leverage.
The list below contains the best currency pairs with an average volatility per day.
- EUR/AUD 180-200 pips
- EUR/NZD 200-250 pips
- GBP/NZD 180-220 pips
- GBP/AUD 140-180 pips
- GBP/CAD 120-140 pips
- USD/ZAR 350-550 pips
- USD/SEK 400-800 pips
- USD/TRY 500-1000 pips
The pros and cons or volatile and non-volatile pairs are explained in this article. And finding the best forex currency pairs to trade, especially for beginners can be difficult. Most of the experienced traders don’t have issues as they have successful trading results and know how to do the technical analysis correctly.
But for beginners, in the forex trading market choosing volatile pairs could offer more opportunities in the forex market but also could provide a higher risk for them. As we mentioned currencies as USD pair, Pound Sterling, Yen, Euro, Australian Dollar, Hong Kong Dollar, etc, are some of the pairs most stable in the market.
Trading currency pairs with the lowest spread on exchange rates are very important too. You’ll also need to find the best time to trade currency pairs because it depends on the trading session such as the London session, New York session, Toky session, etc.