If you’re looking at starting to trade in currency pairs, then you’ll have seen that there’s a fair few to choose from. This makes finding the right pair for your trading strategy a bit of a challenge.
To help you find the currency pair that works for you, we’ve asked pro trader and influencer Ken FX Freak to share his top tips.
Think about trading sessions
When choosing a currency pair to trade in, it’s important that you know which sessions you’re looking at and the currency pairs that are linked to those respective sessions.
When choosing a pair, you want to make sure there’s enough liquidity, volume and movement within the currencies you’re trading to best suit your strategy.
There are three main sessions within the trading world:
Includes China, Japan, Australia and New Zealand. This means that when that part of the world is awake, we’ll see the most liquidity, volume and movement in this session.
The two main currencies within this market are GBP and EUR, both of which are very active within this session.
Any pair that’s made against the dollar falls within this session.
Being aware of the countries that sit within each of these sessions will help you to determine which pair might be best suited to your trading strategy. For example, if you’re based in Australia, it might not be a good idea to invest in a pair within the London session, as you’ll be asleep and unable to analyse the market or take action when it’s moving.
Get to know one currency pair
When I first started off, I took the approach of getting to know just one pair at a time. There’s no point in having a watchlist of ten because you can’t analyse that much data every day.
By selecting one or two to focus on, you can get to know and understand their patterns and behaviours. Once you’ve got to know one, you can move onto the next.
This will help you to build a greater understanding of the best currency pair to trade in.
Choose the right pair for you
When choosing a currency pair to trade, make sure that you pick one that’s in a relevant session. This way the pair will be active while you’re trading; for example, if you’re based in Australia you want to choose a pair within the Asian session.
Also keep in mind that there’s not one currency pair that’s going to give you the most success or the most wins. It’s only once you get to know them that you’ll begin to know which ones are best suited to you and your trading strategy.