Analysis of The Best currency Pairs To Trade in 2022
Let’s take a more detailed look at the best currency pairs to trade and the most popular among traders as follows:
One of the most traded currency pairs in the world is the EUR/USD. This pair represents the two largest economies in the world, generating trillions of dollars a day in transactions. As such, it offers massive liquidity levels, great price movements and the lowest spreads among modern day forex brokers.
The currency pair is a favorite of traders for its predictability thanks to the high transparency of both the European Union and the United States. As such, price dynamics can be predicted using a range of technical analysis indicators. This pair is also sensitive to fundamentals, so it is very easy to analyze this pair using fundamental analysis.
It is recommended to trade this pair between 13:00 and 16:00 GMT, as this time sees the biggest moves of the day. This is also when the New York and London markets are open, which means that there are large trading volumes that are taken from two markets As such, spreads are usually lower during this period.
As with the EUR/USD, the USD/JPY is a popular currency pair among beginners and experienced traders alike, offering exceptional liquidity, relatively high buying/selling opportunities, high levels of volatility and greater predictability. As the most liquid currency in Asia, it is often used as part of a carry trade strategy, whereby traders borrow the yen at a low interest rate in order to fund an investment in a higher-yielding currency, such as the dollar.
Yen trading also provides the availability of a wealth of resources and data, including direct access to charts, exchange rate history charts and average daily rates, as well as online forums and blogs offering regular market forecasts and analysis. However, while volatility is an advantage, it can also lead to sudden price swings, so you must remain vigilant while trading to avoid your winning trade quickly turning into a costly loss.
The ideal time to trade USD/JPY is between 12:00 and 15:00 GMT, because both the London and New York stock exchanges are open for the majority of this period, the biggest daily price movements are tested at this time, realizing the possibility profit as much as possible.
The GBP/USD pair is the ideal currency of choice for any trader as it has extremely high liquidity levels, low bid/ask spreads and an efficient trading environment. Both currencies represent very large and powerful economies, from which myriad information is available on an instant basis, as well as innumerable resources and data available for analysis.
In order to achieve efficiency and capture the largest daily market movements, the best time to trade in this pair is between 06:00 and 16:00 GMT, as the trading volumes are very large during this time and therefore the market has large movements and low spreads And the chances of winning are rising. However, keep in mind the risks involved in trading the GBP/USD. While this pair is most popular among professional traders with an emphasis on short-term strategies, it is wise for traders to exercise caution due to the high volatility.
It may be best to avoid currency pairs that have high spreads. The spread recommended by trading experts tends to be between 0 to 3 pips. When it exceeds 6 pips, the currency pair may become very expensive, which can lead to larger losses.
However, this does not mean that you should avoid everything that has high spreads. The best way to trade reasonably and efficiently in this regard is to practice risk management in your trading, so that you can manage your trades effectively.
Special currency pairs (exotic currency pairs)
Exotic currency pairs such as the pairs that are paired with the Swedish Krona, African Rand, Turkish Lira and more have lower levels of liquidity, wider spreads and greater volatility, which means they are more difficult to predict than the major currency pairs – even with deeper market analysis.
The best currency pair to trade for you is usually the one you are most familiar with. It can be very beneficial for you to trade the currency from your country, as it is included in the major currencies, of course. This is only true if your local currency has some nice swings as well. In general, knowledge of political and economic issues in your country leads to additional knowledge on which you can base your trading.
You can find this information through economic announcements in our forex calendar, which also lists forecasts and forecasts related to these announcements. It is also recommended to trade pairs that contain your local currency (also known as “exotic pairs”). In most cases, your local currency pair will be shown against the US dollar, so you’ll need to stay on top of that currency as well.