Best Currencies to Trade in Forex
http://www.theforexnittygritty.com/forex/best-currencies-to-trade-in-forex
It is, or should be, obvious that the best currencies to trade in Forex are those that will make you the most money. With the use of an alert service one can spot the best currencies to trade in Forex based on market volatility. However, the best currencies to trade must also be those which trade in high liquidity, high volume, and with transparency. Technical analysis of Forex pairs is easier and commonly more profitable in the major currencies. Fundamental analysis of Forex pairs is also more accurate in the major currencies making these the best currencies to trade in Forex.
Majors versus Minors and Technical Analysis
Technical analysis in the Forex market is a statistically based operation. A given price pattern can be highly indicative of a coming price increase or fall. In a sense history repeats itself and Forex technical analysis uses the past to predict the immediate future. Statistics work better when the numbers are larger. Thus technical analysis of major pairs is more accurate than technical analysis of minor Forex currencies. There is more money in the major currencies which increases the amount of trading but because better analysis begets better results this also increases the trading volume, liquidity, and profit potential.
Major Forex Currencies
In general the best currencies to trade in Forex are the majors. This are:
United States Dollar, USD
Euro, EUR
British Pound, GBP
Yen, YEN
Swiss franc, CHF
Canadian Dollar, CAD
Australian Dollar, AUD
These currencies are most traded and are tied to strong economies. Because of their high trading volume technical analysis of major Forex currencies tends to be much more accurate and more likely to lend profits to Forex technical strategies than with minor currency pairs.
8. Technical analysis in the Forex market is a
statistically based operation. A given price
pattern can be highly indicative of a coming
price increase or fall.
9. In a sense history repeats itself and Forex
technical analysis uses the past to predict
the immediate future.
10. Statistics work better when the numbers are
larger. Thus technical analysis of major
pairs is more accurate than technical
analysis of minor Forex currencies.
11. There is more money in the major
currencies which increases the amount of
trading but because better analysis begets
better results this also increases the trading
volume, liquidity, and profit potential.
16. Because of their high trading volume
technical analysis of major Forex currencies
tends to be much more accurate and more
likely to lend profits to Forex technical
strategies than with minor currency pairs.
17. Here are the top fifteen currencies by
percentage of transactions in which they
are traded.
18. Top Fifteen Currencies by Percent of Daily Trades, 2010 Data
Currency
Percent of Daily Trades
US Dollar
85
Euro
39
Yen
19
British Pound
13
Australian Dollar
8
Swiss franc
6
Canadian Dollar
5
Hong Kong Dollar
2
Swedish Krona
2
New Zealand Dollar
2
South Korean Won
2
Singapore Dollar
1
Norwegian Krone
1
Mexican Peso
1
Indian Rupee
1
19. As we see from the preceding
information, the USD dollar is used in
nearly half of all Forex trades.
20. Part of this is because many minor
currencies only trade versus the US dollar.
21. As such, one trades minor currency A for
US dollars and then US dollars for minor
currency B.
22. Within the major currencies there can be
substantial price action. The fundamentals
are easier to read because the economies
of Europe, Japan, the
USA, Canada, Australia, Great Britain, and
Switzerland are highly developed and facts
are relatively easy to come by.
23. There may be significant price action in
minor currencies but one commonly needs
to have inside information in order to make
an informed decision as to which trades to
make and when to make them.
24. The best currencies to trade in Forex are
the ones that combine the best profit
potential with the least risk of loss.
