How to choose a currency pair
As in any Forex market, a lot depends on the choice of trading instrument, and unlike real trading, a lot of other indicators are taken into account here, and not just supply and demand.
The approach to selection should also take into account the trading strategy itself that the trader has chosen, and not just the characteristics of the trading instrument.
It is taking into account the Forex strategy that allows you to choose the right pair that gives the maximum chance of success in stock trading.
In addition, many advisors are created for a specific exchange asset; this is also important when making the right choice.
• Scalping and pipsing - short-term trading puts forward a lot of requirements for a currency pair, firstly, a minimum spread, the absence of additional commissions, and high volatility.
As a rule, the most suitable for scalping popular currency pairs.
• Long -term strategies - here the size of the spread is not so important, the transaction is held from several days to several weeks, during which time the currency couple will pass more than a dozen points.
It has some significance swap, it is advisable to clarify its meaning before opening a long-term transaction.
For long -term strategies, instruments with a long, stable trend in this role can be almost any currency pair. Especially if she made a turn at the support or resistance line.
• on a breakdown - select a couple on which a clear price channel is loomed or it is completely in flate. This approach significantly increases the chances of success, since a breakdown causes a really strong event.
• Character - if you are a fan of risky trading, then you should choose the instrument on which the most events occur, which means that sharp trend movements are most often observed.
Typically, this category includes couples with the participation of an American dollar or euro. For calm trade, pairs are suitable for the above currencies that include the above.
• Time - one should not think that all trading tools behave equally without taking into account the time of day, the greatest activity is usually observed during the news of the currency forming a currency pair.
For example, EUR USD is more actively moving on European and American Forex sessions.
Also, when making a choice, one should not forget that the presence of ready -made scripts for its analysis, analysts, and of course the magnitude of the spread, depends on the more popular among traders.