Forex market is the biggest market in the world with the largest number of currencies traded every day. The first answer that every trader who wanted to enter the Forex market is what is the best currency pair to trade in the market? This is the most ambiguous question to answer. While EURUSD and GBPUSD are the two popular currency pairs traded in the market, choosing a pair to trade in the market is an individual choice entirely. When you are trying to choose a currency pair in the Forex market, you are about to encounter number of recommendations based on the vast trading experience of the brokers that are willing to offer suggestions. However, if you are a novice trader looking for a way out to choose right currency pair, here are few factors you should consider.
It is good to choose any currency pair as long as you are able to trade during the trading sessions. If you are choosing currencies like EUROUSD and GBPUSD, you have to deal with American, Europe and British economies. When the European markets close, Asian markets begin to trade, facilitating the trade at their convenient time. Forex markets allow you to trade the currencies during the trading session as well as after the session. Activity period of the national banks of various currencies is called trading session. Trading the currencies during the activity period of the bank is most popular method to avoid false signals. You should choose the currency pair based on currencies that are actively traded.
Pair trading strategy with trending
Good that you have chosen to trade the currency while it is trending. Your choice of the currency pair should fit in the strategy you wanted to trade. If you are applying a trending strategy, then ensure that your pair is trending too to make good profits. By any chance if you find any currency pair moving sideways you have to choose a range from trending strategy to sideway strategy. On the whole, you should make sure that the strategy you use to trade should match with the currency pair. You can apply many strategies on a pair, however, you should make sure the behavior of the currency before you trade it so that you match the right pair with the right strategy.
ATR which is termed as average true range is very important while choosing the currency pair to trade in the market. It is average movements of pips in a single day in Forex trading. You should know this ATR before choosing a currency pair, otherwise you may hit stop loss. If you are aggressive trader who is looking to make big in short time you should take a special note on pairs with high ATR because your stop loss should not be tight. Knowing average true rate currency pair and the strategy you want to trade is going to make a big difference in success or failure you make through currency trading.