Currency Pairs

You might have already known that the forex market trading activity takes place with currency pairs. Traders buy one currency and later sell it in order to make a profit. Profits are realized through the differences in the currency pair prices. Usually, a trader will buy a currency at a lower price and later sell the same currency at a higher price. Although, price fluctuations minute, the point differences can make you a lot of money. Learn the right tips on choosing Currency pairs so you can make profits in this article.

Although, there are many currency pairs to trade within the currency exchange market, these are not the same. Some pairs are stronger or weaker than others are.

The strongest pair

The Eurodollar or the EUR/USD pair is the heavily traded currency pair. Due to this, the pair has a higher trading volume; therefore, you can make a tidy profit by trading in the pair. In addition to having high trading volume, the pair also has low spreads (broker commissions). The low broker commissions further increase the amount of profits that you stand to make from the pair. If you intend to trade in the pair, there are many training products and software, which will help you in understanding how to trade.

Choosing Currency Pairs -Top Four

Although, the EUR/USD is the leading currency pair in the market, it is not the only one. In addition to the pair, there are also the GBP/USD, USD/CHF, and USD/JPY.  When you are deciding on the pair that you should trade in, you should give these pairs a great thought. This is because the pairs offer greater liquidity. Therefore, if you are selling a currency in any of the pairs, you will easily get a buyer for the currency. In addition to this, the pairs attract very low commissions; therefore, you will make larger profits.

Other pairs in the market

While the top four major currency pairs are the most used by almost 80% of the traders in the market, there are other major currencies. These include NZD/USD, USD/ CAD, and AUD/USD.  Although, they do not make to the top four, they are common and a good number of traders used them.