Choose the right forex pairs for your trading style: 10 pairs you need to know

If you are a beginner trader in the forex market, choosing the right forex currency pair is a crucial first step toward success. Not all pairs are suitable for everyone, as each pair has its own characteristics, risks, and levels of volatility.

Why Forex Pairs Determine Trading Performance

Forex currency pairs consist of a base currency and a quote currency. For example, EUR/USD means how much one euro is worth in US dollars. These exchange rates are constantly changing, influenced by economic events, central bank decisions, and political situations.

Price movements are measured in Pips (Percentage in Points), which help traders evaluate profits and losses. Key factors such as interest rate differentials, inflation rates, employment data, and GDP growth directly impact currency pair movements.

Categorizing Currency Pairs: Risk and Liquidity

The forex market has three main types of pairs:

Major Pairs - Include the US dollar and other major currencies. They have the highest liquidity, narrow spreads, and are driven by global economic news.

Minor Pairs - Comprise major currencies without the US dollar, such as EUR/GBP. They tend to be more volatile with wider spreads.

Exotic Pairs - Involve currencies of developing countries. They are the most volatile with the widest spreads.

5 Major Currency Pairs Traders Must Understand

EUR/USD: Euro-Dollar (The Queen of the Market)

The most traded pair globally, reflecting the Eurozone and US economies. Influenced by ECB and Fed policies.

Why choose it: Moderate volatility, narrow spreads, lots of economic news, ideal for beginners.

Best trading hours: 08:00-16:00 GMT (London-New York overlap)

USD/JPY: US Dollar-Japanese Yen (Stability in Asia)

Strongly linked to Asian markets, driven by interest rate differences between the Fed and BoJ. Yen is a “safe haven” currency during market fears.

Why choose it: Suitable for medium-term trading, ideal during Asian session.

Best trading hours: 23:00-03:00 GMT (Tokyo session)

GBP/USD: Pound-Dollar (High Volatility, Big Opportunities)

Known as “Cable,” with a long history, famous for sharp movements and sensitivity to political events like Brexit.

Why choose it: High profit potential, suitable for mid to high-level traders, frequent news releases.

Best trading hours: 07:00-16:00 GMT (London session)

USD/CHF: US Dollar-Swiss Franc (Risk Hedge)

Swiss Franc is another “safe haven” currency. This pair is stable and suitable for those preferring low volatility.

Why choose it: Security, calm during turbulent markets.

Best trading hours: 07:00-16:00 GMT (European-New York sessions)

AUD/USD: Australian Dollar-USD (Classic Commodity Pair)

Linked to global commodity prices, especially gold and iron ore. Trade relations with China heavily influence this pair.

Why choose it: For those interested in commodity trends.

Best trading hours: 00:00-04:00 GMT (Asian session)

Minor and Exotic Pairs

USD/CAD: US Dollar-Canadian Dollar (Oil and Liquidity)

Known as “Loonie,” driven largely by oil prices, as oil is Canada’s main export.

Why choose it: Oil price correlation, moderate volatility.

Best trading hours: 12:00-20:00 GMT (New York session)

EUR/GBP: Euro-Pound (European Relations)

Less volatile than GBP/USD but still sensitive to economic and political events in Europe.

Why choose it: Moderate volatility, for those seeking “safer” European pairs.

Best trading hours: 07:00-16:00 GMT (London session)

NZD/USD: New Zealand Dollar-USD (Kiwis and Dairy)

Linked to global dairy prices, as New Zealand is a major dairy exporter.

Why choose it: Carry trade opportunities, good volatility.

Best trading hours: 00:00-04:00 GMT and 12:00-16:00 GMT

USD/CNY: US Dollar-Renminbi (Centralized Relations)

Controlled heavily by the PBoC, influenced by Chinese policies, trade balance, and economic indicators.

Why choose it: For those following China’s economic trends globally.

Best trading hours: 01:00-09:00 GMT (Asian session)

USD/HKD: US Dollar-Hong Kong Dollar (Pegged Stability)

Pegged tightly to the US dollar, with low volatility, suitable for risk-averse traders.

Why choose it: Low volatility, minimal risk, ideal for carry trades.

Best trading hours: 01:00-08:00 GMT (Asian session)

How to Choose the Right Forex Pair: Key Tips

For Beginners

Start with EUR/USD or USD/JPY — moderate volatility, high liquidity, diverse economic data, easy to predict, with many educational resources.

For Volatility Seekers

GBP/USD offers more profit opportunities with sharp price movements but requires good risk management.

For Asian Traders

USD/JPY and AUD/USD are ideal, as the best trading occurs during the Asian session with relevant economic data.

For Risk-Averse Traders

USD/CHF and USD/HKD provide stability and safety during market reversals.

Important Factors to Consider Before Choosing

1. Market Understanding: Find pairs you can easily follow with news and economic indicators.
2. Trading Hours: Choose pairs most active during your available trading times.
3. Trading Strategy: Match pairs to your trading style (short-term, long-term, swing).
4. Risk: Understand spreads, volatility, and associated risks.
5. Capital: Invest according to your budget and avoid overly volatile pairs if you’re risk-averse.

Summary: Forex Pairs in a Changing World

Each forex pair tells a story about the economy, politics, and market sentiment through price movements. Choosing the right pair is a vital step toward becoming a successful trader.

Whether you are a beginner or an experienced trader, real-time economic updates, monitoring central bank policies, and sticking to your risk management strategy will help you capitalize on the opportunities the forex market offers effectively.

Trading involves risks and may not be suitable for everyone. Make sure you understand all risks before trading.