Currency pair plays an important role in forex profit making. Currency pair refers to the currencies that you are buying and selling with. There are two types of currency pairs in forex and they are called the major currency pairs and the minor currency pairs. All of these currency pairs are used in Forex by the traders. Though there are minor currency pairs, it is always the major currency pairs like EURUSD, USDJPY, GBPUSD and USD/CHF which are in popular use always.
When selecting your currency pair, there are some important factors that you have to keep in mind. These pairs are not mere a pair as they will be the currencies that you will be trading your money with. Most of the time, traders like to choose the currency pair which are the majors in Forex. However, if you look at the professional Aussie traders then you will notice that some of them chose currency pair based on their own trading strategy. To be precise you need to develop a solid trading system and based on that you need to assess the performance of different trading assets. Once you find the trading result you will know which pair you should trade.
Select the widely use currency pair: When you go to a game, do you play the game where there are no players or do you go the game where there are many players and betting against each other in the game? You always go the busiest game. When you are trading forex, always choose the widely used currency pairs or the major currency pairs. They will give you the best movement in the market and you can also take help from your online resources if you face any problems. They are also more stable in market volatility than the minor currency pairs. So if you trade with the stable pairs then you can easily execute high-quality trades in your online trading account. When you trade the market make sure that you are not risking more than 2 percent of your account capital in any single trade since it will greatly increase your risk exposure in trading.
Select the pair with most volatility: You do not want to get stuck in the market with a pair that does not move. You want a pair that will move in the market and it is where you will make money. When choosing your currency pair, use the market volatility and choose the pair that has the best rate of volatility. The more volatility a currency pair has, it has more chance of movement in the market. If your currency is moving in the market, you can make money in Forex.
Select a pair you are familiar with: Choose the currency pair that you feel familiar with. Do not go with a pair which is very uncommon or hasn't heard of. Select a comfortable pair currency for your trading. For instance, if you prefer the EURUSD pair then you need to know the details about the EURO and USD. Fundamental factors are often considered to be the most powerful price driving catalyst in the forex market. So as a professional trader you always need to trade the live assets after doing the fundamental analysis. So make sure that you know all the details about the high impact news release of EURO and USD in order to execute the high-quality trades in the market.
Conclusion: Selecting a currency pair is important for traders to make money and also to develop their strategy. When you find the best trading pairs make sure that you trade the market with proper risk management factors. As a trader, you should also do the fundamental analysis before placing any trades. Last but not the least always trade in favor of the long-term trend.