Choosing the Right Forex Pair for You
Choosing a pair that matches our trading type character is very important, it is to seek comfort in forex trading activities. So what needs to be considered in choosing the best forex pair?
The thing we have to find out is to find the best pair we can know through spread. The majority of brokers offer small spreads, especially on the EUR / USD pair. Yes, most brokers provide the lowest spread against this currency pair. EUR / USD pair is very popular with scalpers because it’s famous for its low spreads and stable movements.
GBP / USD
Like EUR / USD, the GBP / USD pair is also a bit similar, but sometimes has a higher spread, only a few differences are 0 point pips. This GBP / USD currency pair is also famous for having high volatility and range every day, so often intraday forex traders place orders in this currency pair.
Currently the movement is becoming more “wild” due to issues and political developments between the European Union and the Brexit Referendum. So you should be more careful if you trade in the GBP / USD pair and coincide with events that discuss Brexit, such as the development of the Brexit negotiation process.
The USD / JPY currency pair is sensitive to what is happening in Japan and also the United States, whether it’s economic conditions or the central bank’s policies. Usually it has a negative correlation with EUR / USD movements. When the value of the USD strengthens, the EUR / USD pair will move down and also the USD / JPY will strengthen. While the EUR / JPY pair will usually move randomly with the shadow (tail) on each candlestick.
The USD / CAD pair forex trades the dollar against the Canadian dollar.
This pair is very closely related to world oil movements. Because Canada is a world oil supplier, so oil prices will affect the value movement of Canadian dollars. Sometimes this pair is negatively correlated with USD / JPY, although both the base currency is USD. This is due to the negative correlation between oil prices and the USD value.
Japan, which is an oil-consuming country and when the price of world oil rises, Japan will also pay more to buy oil, which affects the decline in the Yen. Now in the science of pair correlation strategies it is often used by forex traders to look for profits in USD / JPY and USD / CAD pairs.
AUD / USD
AUD / USD, this currency pair is related to the price of gold due to the correlation of gold commodity prices with Australian dollars. When gold prices soar, the value of the AUD currency will usually strengthen and make the AUD / USD currency pair move up. This is because the State of Australia is one of the largest producers of gold in the world. This is also used by traders who are able to analyze the movement of gold as well as an inverse correlation to the exchange rate of the US dollar.
Well that’s how to choose a forex pair that matches your forex trading abilities and types. To be able to understand what affects currency movements you must learn about economic conditions and related commodities. You can learn about fundamental education at Forex4live.