In the foreign currency exchange market, there are a lot of currency pairs for trading. The first currency of each pair is the one you buy or sell (base currency = commodity). And the second one is the one you pay with (secondary currency = money). So, it doesn’t matter which currency your trading account is in. All because it does the exchange automatically and transparently for you. For example, if you decide to buy in the EUR/USD pair (Euro vs. US Dollar) you will be buying Euros paying in US Dollars.

When you open a position you are trying to predict how the price will behave. That’s to say, according to the strength of one currency pair against the other. So, if you decide to open a position to buy it is better known as “going long”. And the goal is for the price to increase to close the position later with a sale and collect profits. 

Unlike other investments, you only earn money if its value increases. And you sell it more expensive than when you bought it. In Forex you can also trade in the opposite direction. That’s to say, you can open a selling position if you think the price is going to go down. As a result, it’s called “going short”, to close it later with buy and collect the profits.

Now, let’s take a view of some topics about the best foreign currency exchange market for you.

The most convenient foreign currency exchange market 

What are the most popular currency pairs in Forex? The four main currency pairs in the foreign currency exchange market are:

  • EUR/USD (Euro vs. U.S. Dollar)
  • GBP/USD (British Pound vs. US Dollar)
  • USD/JPY (US Dollar vs. Japanese Yen)
  • USD/CHF (US Dollar vs. Swiss Franc)

The most popular currency pair worldwide is the EUR/USD and it is also the one with the highest trading volume. It’s estimated that almost 70% of the transactions in the Forex market are made with this pair. So, it’s the most liquid. And refers to the two most important currencies currently in circulation worldwide. Therefore, it is not only traded by retail traders but also by large banks, and financial institutions.

The other 3 pairs above the EUR/USD also have a large trading volume and liquidity. Other pairs that tend to be very attractive. And, also, popular for professional traders such as:

  • GBP/JPY (Pound Sterling vs. Japanese Yen)
  • EUR/JPY (Euro vs. Japanese Yen)

They are volatile and strong pairs that allow getting important profits. But it depends on the wide oscillations of their prices. Although they also involve a higher risk if you are a beginner. Now we talk about the foreign currency exchange market in terms of the trading volume. Keep reading. 

Foreign exchange currency market according to trading volume

Next, the foreign currency exchange market, according to trading volume, has other pairs. And they are the result of crosses of the major currencies mentioned above. For example, USD, EUR, GBP, JPY, and CHF. Besides other major currencies, such as:

AUD Australian dollar, CAD Canadian dollar, or NZD New Zealand dollar). Let’s take a look at these foreign exchange currency market examples:

  • USD/CAD (U.S. dollar vs. Canadian dollar)
  • EUR/GBP (Euro vs. British Pound)
  • EUR/AUD (Euro vs. Australian Dollar)
  • EUR/CHF (Euro vs. Swiss Franc)
  • EUR/CAD (Euro vs. Canadian Dollar)
  • GBP/CHF (British Pound Sterling vs. Swiss Franc)
  • GBP/AUD (British Pound Sterling vs. Australian Dollar)
  • GBP/CAD (British Pound Sterling vs. Canadian Dollar)
  • CHF/JPY (Swiss Franc vs. Japanese Yen)
  • AUD/USD (Australian Dollar vs. US Dollar)
  • AUD/CAD (Australian Dollar vs. Canadian Dollar)
  • AUD/CHF (Australian Dollar vs. Swiss Franc)
  • AUD/JPY (Australian Dollar vs. Japanese Yen)
  • CAD/JPY (Canadian Dollar vs. Japanese Yen)
  • CAD/CHF (Canadian Dollar vs. Swiss Franc)
  • NZD/JPY (New Zealand Dollar vs. Japanese Yen)
  • NZD/USD (New Zealand Dollar vs. US Dollar)
  • NZD/CHF (New Zealand Dollar vs. Swiss Franc)
  • NZD/CAD (New Zealand Dollar vs. Canadian Dollar)

Finally, we have the exotic currency pairs that have a lower trading volume. Also, they have higher volatility with the consequent increase in risk. This means that can predict their behavior. In the same vein, among these pairs are crosses with less frequent currencies. For example:

  • The RUB (Russian ruble)
  • MXN (Mexican pesos)
  • SEK (Swedish krona)
  • NOK (Norwegian krone)
  • DKK (Danish krone)
  • HUF (Hungarian forint)
  • ZAR (South African rand)
  • PLN (Polish zloty)
  • TRY (Turkish lira)
  • BRL (Brazilian real)
  • SGD (Singapore dollar)

So, what foreign currency exchange market is best for me? Take note of the best pairs to trade on Forex.

What are the best pairs to trade on Forex?

If you are a beginner trader, the best pairs for Forex trading are those with the highest liquidity. And trading volume. To clarify, they are for 2 fundamental reasons:

1) These pairs, such as EUR/USD, generally have lower volatility

Besides, they carry an imminent lower risk when trading on them. Generally in these pairs, you will be able to place your stop loss. That’s to say, closer to the entry point than in pairs with higher volatility. Also, they may have more abrupt movements, force you to place the stop loss further away. As a result, assuming more risk or triggering the stop loss with losses when it could soon turn in your favor.

2) These pairs with higher trading volumes have much lower spreads than the rest 

The spread is the differential between the bid price and the asking price. So, the online broker applies as a commission. Meanwhile, it’s common for major pairs to have a spread of fewer than 3 pips. Even in some cases below 1 pip. So, in the case of minor or exotic pairs, these spreads are much higher, often exceeding 15 or 20 pips. Whenever we open a position we are going to start in negative due to this differential. And, of course, it’s much easier to recover 1 or 3 pips than 15 or 20. This added to the high volatility of the most exotic pairs, make them not recommended. Especially for less-experienced traders.

In short, identifying the best foreign currency exchange market is not a simple task. And the best way to do it is through practical experience. So, it’s more advisable to open a demo account first. Moreover, you can start trading while continuing your trading education.