There are a number of factors that a Forex trader considers when choosing a currency pair. The great thing about the foreign currency exchange is that you’re not limited to the number of pairs you may trade at a given time. You may choose one, or opt for a few of them simultaneously. Many people for example usually pick the EUR/USD and another pair that generally trades in the same direction i.e. the GBP/USD.

So if you’re just getting started, look at the spreads for each combination. When the spreads are low, you’re able to maintain your trading costs at a minimal. With tight spreads you can also benefit from times of high volatility during which the gaps are bigger.

You then need to look at the Forex’s three phases. Some of them have specific tendencies and fluctuate the most during certain parts of the day. Note that the best times to trade are those sessions when the market is volatile and volume is high. So if you turn on your computer from 8 am EST through 12 pm EST you’ll find that the New York and London stock exchanges are open, and all of the currency majors are moving well.

Many traders like to focus on just one pair. But why limit yourself? The more you know about currency correlations and inverse relationships the better off you’ll be. The global Forex market is an ocean of opportunities for anyone who’s willing to learn.

 

Related posts:

  1. Choosing Money-Making Currency Pairs