Trading Forex: What Pairs to Trade?

Filed under: Learn Forex Trading |

There are many currency pairs that can be traded – but the question is; “Are some forex pairs more reliable than others?” The short answer to this is ‘yes – almost certainly’. So what are the more reliable pairs to trade?


One would think that all of the major pairs (which are the EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY, USD/CHF, USD/CAD, XAU/USD, and XAG/USD) are the best pairs to trade, as they have the best liquidity. However, this is not strictly true.


Many people claim that the USD/CAD pair is extremely unreliable when it comes to price action trading. This might be due to the close correlation that it has with oil and the fact that it reacts to news events on oil.  Most of the other major pairs make good currencies to trade off. However, you must be careful not to ‘double up’ on trades. For example, the EUR/USD is inversely correlated to the USD/CHF pair. So if you take long trades on both, they may well cancel each other out. The EUR/USD and the GBP/USD are also closely correlated and move very similarly to each other. Therefore, if you take trades on both at the same time, then you may in effect be taking one trade with a large risk level.


There are also some good minor pairs to trade, such as the GBP/JPY, the AUD/JPY, EUR/JPY, and NZD/JPY. Again, you must be careful not to double up on trades.


Finally the XAU/USD, and XAG/USD refer to the exchange rates for gold and silver, and these are very reliable pairs to trade off.


In summary, try to focus your trading and not trade off of too many pairs. If you have a maximum of say ten pairs that you look at, then you will be able to get to know the ‘personalities’ of these pairs and get a better feel for them.

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