How to choose a currency pair
As with any market, the choice of trading instrument in Forex is highly dependent. Unlike real trading, a multitude of other factors are taken into account, not just supply and demand.
The approach to selection should also take into account the trader's chosen trading strategy, not just the characteristics of the trading instrument.
Taking into account a Forex strategy allows you to select the right pair, offering the best chance of success in exchange trading.
In addition, many advisors are created for a specific exchange asset, which is also important when making the right choice.
• Scalping and pipsing Short-term trading places a lot of demands on a currency pair, including a minimal spread, no 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 pair will move 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 are suitable; almost any currency pair can serve this role, especially if it has reversed near a support or resistance line.
• On a breakout - we select a pair for which a clear price channel is emerging or it is even in flate. This approach significantly increases the chances of success, since the breakout is caused by a truly strong event.
• Character - if you are a fan of risky trading, then you should choose an instrument in which the most events occur, which means that sharp trend movements are most often observed.
Typically, this category includes pairs involving the US dollar or euro. For more relaxed trading, pairs that include the above-mentioned currencies are suitable.
• Time - you should not think that all trading instruments behave the same way regardless of the time of day; the greatest activity is usually observed during the release of news on the currencies that form the currency pair.
For example, EUR USD moves more actively on the European and American markets Forex sessions.
When making your choice, remember that the more popular a currency pair is among traders, the availability of ready-made scripts for its analysis, analyst forecasts, and, of course, the spread size depend on it.
