The Most Traded Currencies and Pairs – What to Look For

by admin on January 31, 2014

The foreign exchange market enables currency conversions across different geographic zones. Hedge funds, central banks, and various commercial companies are major participants. There are actively traded currencies such as the British pound, Euro, New Zealand dollar, and others. Forex pairs are divided in three categories, with majors being one example. Currencies paired with the USD include the New Zealand dollar, Euro, and British pound. Some currencies are positively correlated while other pairs are more volatile. Traders also focus on commodity currencies such as the Chilean peso and Norwegian krone. Some countries are heavily dependent on export of raw materials. Commodity currencies belong to countries that are rich in natural resources. Investors also trade crosses that do not include the US dollar. The Japanese yen, Swiss franc, and New Zealand dollar are examples. Some investors also specialize in exotic currencies.

Exotics are currency pairs such as the US dollar vs. the Singapore dollar and the US dollar vs. the Mexican peso. It is not recommended to trade exotics if you are new to Forex. The reason is that they are less liquid than crosses and majors. You can develop a watch list, for example, GBP/JPY, EUR/JPY, GBP/USD, and so on. Of course, you should learn more about top traded currency pairs such as EUR/CAD, EUR/GBP, CHF/JPY, NZD/USD, and others.

Accounts and Strategies

Investors use a wide array of strategies to maximize profits. Reversal patterns and guerrilla trading are two examples. Some traders use stochastic indicators such as full, slow, and fast stochastic.

Productivity and economic health are also important factors to consider. Traders use different instruments such as swaps and forwards. You will learn about momentum trading, daily trading, trading double bottoms and double tops, and other Forex strategies. Trade alerts or signals are also important. Investors use strategies such as basket and divergence trading. You can also choose between different types of accounts, including micro, mini, and standard accounts. Micro accounts are offered to new investors. There are also Forex demo accounts that are suitable for inexperienced traders. They come with tools and charts and allow investors to practice currency trading.

The choice of investment instrument depends on your risk profile. If you are new to investing, you may want to consider other instruments such as bonds, savings and money market accounts, and others.

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