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Jessica Kerry

Currencies that will give me highest gains

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Hi Jessica,

Choosing the best currency pair to trade needs a careful appraisal. The choice depends on several factors such as spread, volatility, trading strategy, and the level of difficulty of forecasting the course.

Euro/Dollar (EUR/USD)

Being the most traded currency in the world by volume, it’s the most liquid pair in Forex, accounting for over one-third of the total volume of Forex transactions. High liquidity makes it one of the most predictable and available pairs worldwide. With so much information available on the currency and low risk associated with it, it’s the best, especially for beginners.

US Dollar/British Pound (USD/GBP)

This is one of the most popular currency pair, thanks to its high profitability. However, high profitability always comes with bigger risks. So, marketers here take advantage of the plenty of market analysis information available online to steer off the risks.

Exotics/ Special Pairs

Since your Forex trading success depends on how knowledgeable you’re in a pair, you should trade the currency from your own country (especially if it’s volatile) because you understand the economical and political issues, the major shapers of the Forex market. That way, you can make good predictions and avoid losses. That said, Brits might choose GBP with other combinations that they’re familiar with.

British Pound/ Japanese Yen (GBP/JPY)

Its one of the most traded pair in the foreign exchange market, attracting both newcomers and veterans in equal measure. Nicknamed “The Dragon,” the pair is highly volatile, attracting high-risk traders, thanks to its high moves in price. The large swings in the market mean traders can potentially make a kill or huge loss in this market.

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Hello Jessica,

As you have stated, you have just started in the Forex arena, so you probably don’t know much. When you go on the web looking for the best currencies to trade, you will be fed information about the popular currencies. The problem is, you are not looking for popularity but advice. You are just starting your journey; advanced traders use most of these popular pairs so you need to start with a currency that suits you best. It should be managed efficiently and give you the right profit margin. Which currency is the best to use?

EUR/USD

It is one of the significant trading pairs as it is traded globally due to its liquidity. It is popular among advanced traders, and it is not recommendable for beginners. It is not easy to predict its movements due to its volatility. The changes in a day can be many and happen very fast. So it is not suitable for people who are just starting to trade. It requires a lot of technical analysis and fundamental knowledge to trade.

GBP/USD

This pair is highly sensitive to news affecting the EUR/USD and political prevailing in the UK. Many people prefer it because when there is a breakout that is showing resistance and potentially goes against a trader, it triggers stop losses. It is moderately severe for a beginner to trade with, but you will need to take precautions. It works best if you go for long term trades. Volatility is predictable, but it would be best for you if you worked closely with American analysts.

USD/JPY

This is the hardest pair to predict. It is affected by news in Japan and USA. The pair is not comfortable to trade for beginers since you will need to know its underlying dynamics and movements. However, if you consider using it, it would be best if you used Swing trading. Furthermore, the majority of the information from financial institutions and banks is inaccurate.

USD/CHF

It is a unique one because it flows in the opposite direction with the EUR/USD. Compared to the EUR/USD and USD/JPY, it has the best flow. Additionally, it is not affected by news that much so movements do not occur frequently. It is useful for a beginner because you can use it as a tool to determine the trend of other pairs. It is ideal for people who are new to the game because it is predictable and less volatile.

AUD/USD and USD/NZD

Both of these pairs move have the same trend and are stable. It displays slow and calm movements and is affected by weather conditions and metal prices in Australia. When the conditions are not favorable, the prices tend to fall. It is suitable for beginners, but you should keep a close eye on the conditions in the regions.

USD/CAD

The USD/CAD is a gentle pair to trade. It is not highly volatile, and because of this, technical analysis is made easy. It is worth noting that if you choose to go with it, keep yourself updated with news involving oil performance. It is ideal for beginners due to its simplicity, but if you want to better your return, you can work with American analysts.

In a nutshell, as a person who has just started trading, you should not goo for popularity. You may end up going for major currencies and bring you losses because you don’t have the skills to manage it. Go for a pair that does not require a lot of experience, and you are comfortable with it. Choosing the best currency is a decision that should be thoroughly researched and analyzed.

 

 

 

 

 

 

 

 

 

 

 

 

Edited by EXPERT'S ADVICE

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Hi Jessica,

Great question, and welcome to the world of Forex

First, you are trading a currency pair and not trading a currency. You are not simply purchasing or disposing a single currency, but you are purchasing or selling a certain currency against the other.
In this scenario, the question becomes; what is the most profitable Forex currency pair to trade in? An apt answer would depend on your strategy. However, the GBP/JPY currency pair sticks out in 2020.

High gains arise from focusing upon executing a trade strategy that rests on high risks to reward ratios. GBP-JPY currency pair historically allows moves whose risk levels rise from 2 to 10 times normal risks.
The strategy rests on making much more money on your winning trades as opposed to the money lost on losing trades. This is the key to profitability arising from long term Forex trading.
This strategy, in a nut shell, is the ability to venture into trades with huge risks versus rewards ratios, making it easier to remain profitable in the long run.
 

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Hey,

When it comes to trading currencies, traders need to know how much the currencies in the pair are worth in relation to one another. This relation is what makes a currency pair. 

Majors

Majors currency pairs include a list of popular currencies that are paired with the U.S. dollar. USD is the strongest and most traded currency in the world because of the very powerful economy of the United States.

The following pairs represent the world’s strongest economies and they are traded in high volumes:

EUR/USD (Euro – US Dollar)
USD/JPY (US dollar – Japanese Yen)
GBP/USD (British Pound – US Dollar)
AUD/USD (Australian Dollar – US Dollar)
USD/CHF (US Dollar – Swiss Franc)
USD/CAD (US Dollar – Canadian Dollar)

Commodity currencies

Commodity currencies involve currencies of countries whose economy mostly relies on the export of specific raw materials. Some of the major currencies such as the Australian dollar, Canadian dollar, and the New Zealand dollar also belong to commodity currencies.

Gold and silver are actual commodities, therefore they also belong to this group and they are traded in U.S. dollars.

Crosses

Crosses are currency pairs that do not involve the U.S. dollar. In the past, if we needed to convert a currency, we would have had to convert the currency to USD and then convert again from USD to the desired currency.

The most-traded crosses include EUR/GBP, EUR/JPY and the EUR/CHF.


Exotics

Exotics refer to pairs that consist of emerging or smaller but stable economies as opposed to large and developed economies like the majors. Some of the popular exotic currency pairs include:

USD/TRY – U.S. dollar vs. the Turkish lira
EUR/TRY – Euro vs. the Turkish lira
USD/ZAR – U.S. dollar vs. the South African rand
USD/MXN – U.S. dollar vs. the Mexican peso
USD/BRL – U.S. dollar vs. the Brazilian real
 

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Hi Jessica,

Despite having more than a hundred currencies in existence, only a few currencies guarantee Forex trading success.

Topping the list is the EUR/USD that boasts of low spreads and volatility. Its popularity also increases access to information, making this pair beginner-friendly.
The USD/JPY cannot go without mention. Characterized by low spreads, it presents a smoother trend than other combinations. Its predictability is due to Japan’s straightforward commodities market. It also allows diversification through numerous trading vehicles, for example, ETFs and futures.
Another major pair is GBP/JPY. With its unmatched volatility, it offers numerous profit windows. The set’s wild swings can be attributed to its sharp pips. The fact that it’s suitable for commodities along with stocks also makes it ideal for risk tracking.
Not forgetting the USD/CHF that has tight spreads in addition to its increased liquidity and trading volumes. Courtesy of the USD, this combination allows traders to predict its performance using information from the Fed and BLS. The CHF currency is also influenced by the SNB and FSO.
 

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Hi Jessica,

The most popular and the most traded currency pair on the market is EUR/USD, which according to the reports, covered 24.0% of daily forex trades in 2019. It’s no surprise this is the most popular pair as it represents two of the largest economies in the world: the European single market and the US.

The second-most traded currency pair is the USD/JPY, which is represented by the US dollar and the Japanese yen. In 2019, this forex pair accounted for 13.2% of all daily forex transactions in 2019.

GBP/USD is another forex pair that’s very popular, represented by the pound sterling and the US dollar. The pair is also known as as ‘cable’, referring to deep-sea cables that used to deliver the bid and ask quotes between the UK and the US. Last year, this pair covered 9.6% of all daily forex transactions.
 

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