Best Pairs to Trade in Forex: A Beginner's Guide to Choosing the Right Currency Pairs.

The best pairs to trade in forex is one of the most asked questions in the trading industry. When new traders are introduced into the market, they quickly get confused because they see dozens of currency pairs available. The feeling can be overwhelming, especially if you have no idea how these pairs operate. 

It is important to understand that not every pair is suitable for every trader or trading style. Knowing what pairs are suitable for your experience level and trading strategy is far more important than following what’s popular on social media. Most times, traders pick pairs that are traded by the majority, not understanding that some traders have been in the game for a long time and understand the ins and outs of that particular pair. 

A currency pair can be influenced by certain things like spreads, liquidity, volatility, and trading sessions. If you do not know this, you may end up picking a volatile pair that doesn’t match your risk tolerance. This is why most traders end up being discouraged even before they start this journey. 

Taking your time to know if the pair aligns with your trading goals and approach will save you a lot of money and time. It doesn’t matter whether you pick major currency pairs like EUR/USD or exotic pairs like USD/ZAR; the concept is standard across all pairs. 

In this article, we will take you through the best pairs to trade in forex, what makes certain pairs beginner-friendly, and how you can choose the right pair with confidence. By the end of this guide, you will know what currency pairs fit your risk plan and trading strategy.

Understanding Forex Currency Pairs

Before looking at the best pairs to trade in forex, it’s essential to know what a forex currency pair is and how it works. Every execution in the market involves buying one currency and selling the other, which is why the currencies are always quoted in pairs. 

What Is a Currency Pair?

A currency pair is the quotation of two different currencies in the financial market. It basically measures the value of one currency to the other. For example, in GBP/USD, the pound (GBP) is compared against the USD. Just by looking at the pair, you can tell the amount of the second currency that is needed to buy one unit of the first currency. 

These pairs are normally divided into three main categories; 

Major Pairs 

• EUR/USD (Euro / U.S. Dollar)
• GBP/USD (British Pound / U.S. Dollar)
• USD/CAD (U.S. Dollar / Canadian Dollar) 

Minor Pairs

• EUR/GBP (Euro / British Pound)
• GBP/JPY (British Pound / Japanese Yen)
• EUR/AUD (Euro / Australian Dollar)

Exotic Pairs

• USD/ZAR (U.S. Dollar / South African Rand)
• USD/TRY (U.S. Dollar / Turkish Lira)
• USD/SGD (U.S. Dollar / Singapore Dollar)

Base Currency vs. Quote Currency

Every pair consists of two currencies. The first currency in the pair is known as the base currency, and the second is the quote currency. In a pair like EUR/USD;

EUR is the base currency.

USD is the quote currency.

When you are buying EUR/USD, you are buying the base currency (EUR) and selling the quote currency (USD), and vice versa. For example, if EUR/USD is at an exchange rate of 1.1500, it means that you need $1.15 to buy €1. When you buy euros and sell US dollars, you are anticipating the euro to strengthen against the dollar and vice versa. 

The Bid and Ask Prices

When you look at a forex quote, you will notice two prices. The bid and ask price.

Bid price: This is the highest price a buyer is willing to pay.

Ask price: The lowest price a seller is willing to pay

The difference between these two prices is what is called the spread. This is the commission the broker charges for executing or opening trades. The higher the liquidity, the tighter the spread, which is why some forex pairs are suitable while others are not.

What Makes a Currency Pair Good for Trading?

Different currency pairs behave differently. Some are predictable while others are highly erratic. Some pairs are also expensive to trade and may not be suitable for your risk tolerance. This is why, as a beginner trader, you don’t just pick any random pair to trade. You must evaluate several factors before investing your money. Here are some factors that’ll help you pick a good pair:

Liquidity

What is liquidity? It is the lifeblood of the financial exchange market. It determines how easily a pair can be bought and sold without the interference of its price. In other words, a highly liquid market has a lot of buyers and sellers, and that makes it easy to open and close trades. 

Pairs like GBP/USD, EUR/USD, and USD/JPY have millions of participants daily, making them highly liquid. With such pairs, execution is faster, slippage is low, and price movements are stable.

Volatility

Volatility is simply a measure of how a pair moves over a certain period of time. Without volatility, traders won’t be able to make profits. High and moderate volatile markets create opportunities for traders to make money quickly. However, traders must be careful because highly volatile markets also come with huge risks. Beginner traders should focus on moderately volatile markets to avoid chasing moves. 

Trading Costs

Traders often overlook the aspect of trading cost, not realizing it could affect their performance. The most common trading costs are spreads and commissions. The best currency pairs have tight spreads, and the broker's commission is also low. 

News Sensitivity

Economic news drives prices. Understanding how a pair behaves over a given period of time will help you determine if it is a suitable one. Some common market movers are inflation reports, interest rates, political developments, employment data, and Gross Domestic Product (GDP). If the interest rates of a country increase, it often strengthens the currency pair. When employment and inflation data weaken, the currency could also lose its value. 

Trading Sessions

In trading, timing matters. The market is usually open 24hrs in a day, but not every hour is market time. There are three main forex trading sessions. The London session, the New York session, and the Asian session. Not all pairs can be traded during the London or New York sessions. 

For example, if you are trading USDCAD, you have no business opening trades during the London session. You need to match your pair with its most active trading session because there is liquidity, and the pair provides better setups during that particular session.

Best Currency Pairs To Trade In The Sydney Forex Session

Best Pairs to Trade in Forex

Now that you know what to look for when picking a currency pair, you can confidently choose one depending on your experience, trading style, and risk tolerance. Some traders prefer pairs with steady movements, while others want volatile pairs to capture huge profits. Below is a list of currency pairs we have picked for you that are beginner and intermediate-friendly and might suit your trading approach: 

EUR/USD – The Most Popular Forex Pair

The EUR/USD pair is considered one of the best pairs for beginner and intermediate traders. This pair accounts for a major share of global forex trading volume as it is one of the most traded pairs in the world. It represents the EUR against the US dollar, which are two of the world’s largest economies. 

Since the pair is highly traded, it is very liquid, resulting in tight spreads, which allow traders to enter and exit trades smoothly. The pair is also easy to analyze and is heavily impacted by economic events, making it tradable. 

Pros

• Highly liquid
• Tight spreads
• Low trading costs
• Stable price movements
• Easy for beginners 
• Suitable for most trading strategies
• Best for London and New York sessions

Cons

• Volatility can sometimes slow down
• Trading opportunities may be limited during quiet market conditions.

GBP/USD – Great for Active Traders

This is one of the most actively traded currency pairs because of its volatility. It is also known as the cable, the name dates back to the 19^th century when exchange rates between London and New York were transmitted via a giant steel telegraph cable laid across the Atlantic Ocean.

Compared to EUR/USD, this pair experiences larger price fluctuations or movement. It creates more opportunities for traders, allowing them to make profits quickly. However, you must also understand that risks could be larger. 

Pros

• Huge price movements
• Very liquid
• More opportunities
• Highly responsive to financial and economic events
• Suitable for scalpers, day traders, experienced beginners, and traders who enjoy highly volatile markets.
• Suitable for both the London and New York sessions

Cons

• High volatility increases risk
• Price can reverse very quickly after news events

USD/JPY – Excellent During Asian Sessions

This is yet another excellent pair for beginner and intermediate traders. The USD/JPY pair ranks among the top traded pairs in the world. Traders who are available during Asian sessions can enjoy trading this pair as it is liquid and moderately volatile. 

The Japanese Yen is also considered a safe haven during periods of market panic and uncertainty. Investors usually move their money to the Yen, which in turn causes substantial price movements. 

Pros

• Tight spreads
• High liquidity
• Clear market trends
• Sensitive to economic news

Cons

• Can be very volatile during global uncertainty
• Largely influenced by the central bank policies of both countries. 

AUD/USD – Ideal for Commodity Traders

The AUD/USD is another pair that provides favorable market conditions. It is mostly suitable for commodity traders as it is heavily influenced by the commodity market, especially gold. Australia is one of the largest gold exporters in the world. When gold prices appreciate, so does the Australian dollar. 

The Australian dollar is also influenced by the Chinese economy. The two countries are strong trading partners, and when the Chinese economy strengthens, so does the Australian economy. This pair also responds well to market sentiments, leading more investors to move their money as they know the pair will perform well. 

Pros

• Produces clean trends
• Perfect for day traders and swing traders
• Moderately volatile
• Closely linked to commodity markets

Cons

• Sensitive to economic events from China
• Greatly influenced by commodity prices

USD/CAD – The Oil Pair

USD/CAD is referred to as the “Oil pair” because Canada’s economy is tied to crude oil exports. When oil prices skyrocket, the Canadian dollar automatically strengthens, causing the pair to decline. The opposite is also true. When oil prices fall, the Canadian dollar weakens and pushes USD/CAD high. 

The pair becomes interesting to traders who enjoy monitoring oil or energy markets. USD/CAD also has a tendency to develop continuous market trends, making it suitable for trend-following strategies. 

Pros

• Develops strong trends
• Good level of liquidity
• Clear correlation with the crude oil market
• Ideal for technicals because of clear market trends

Cons

• It requires one to monitor commodity and economic events
• Oil prices can create sudden market volatility

GBP/JPY – Best for Experienced Traders Seeking Volatility

GBP/JPY is a minor currency pair, but traded by thousands of traders. This is because it is highly volatile and experiences large price swings. The pair combines the British pound, which is a volatile currency, and the Japanese yen, which is a safe-haven currency for investors. The combination makes the pair highly volatile during trading sessions. 

Due to its high volatility, the pair attracts scalpers and day traders looking to get in and out of the market quickly. For beginners, this pair can be overwhelming, especially if you are not fast at making buying and selling decisions. 

Pros

• Huge price movements
• Provides excellent opportunities for scalpers and day traders
• Active trading sessions with strong trends
• High liquid compared to most minor pairs

Cons

• Its high volatility could increase risk
• Traders must use large stop losses
• Experiences sudden price reversals during economic news

Other Pairs you can trade as a beginner or intermediate trader are;

• USD/CHF (US dollar against the Swiss franc) – Perfect for conservative traders.
• NZD/USD (New Zealand dollar with the US dollar) – Beginner-friendly alternative.

All the above-mentioned currency pairs have their own strengths, weaknesses, and personalities. Rather than mastering all pairs, pick one or two and trade them. As your knowledge increases, you’ll understand which ones align with your trading style. Here is a quick comparison table of the best pairs to trade in forex based on liquidity, volatility, and who it suits best:

Read more about Most Trending Forex Currency Pairs: Top 7 That Trend Most

Common Mistakes Traders Make When Choosing Currency Pairs

Picking the right forex pair is as important as having a good risk plan. Unfortunately, most beginners overlook small details while trading currency pairs, which end up destroying their overall performance. Some of the common pitfalls in the market include;

• Trading too many pairs: Monitoring many pairs can lead to missed trades, poor decision-making, and can also be very overwhelming. Take only one or two pairs and master them. 
• Ignoring Spreads: Currency pairs with wider spreads will definitely increase your trading cost. Always choose pairs with tight spreads.  Read about our guide Forex Currency Pairs With Lowest Spreads
• Chasing Volatility: Highly volatile markets can increase your risk. While it may be quick to print money with these pairs, you could be exposing your account to unprepared risk. 
• Ignoring Economic Events: Major financial events like interest rate and inflation reports can trigger sharp movements. If you don’t use a stop loss, your whole account could be wiped out in seconds.
• Getting in the Market During Inactive Sessions: Not every hour is trading time. Some currencies move smoothly during certain trading hours, like the London session or the New York session. Outside these sessions, the market is just consolidating.  
• Switching forex pairs constantly: You will never master a pair if you keep jumping from one to the next. Take your time to build confidence and recognize the currency’s pattern. 

By avoiding these mistakes, you will quickly identify which pairs give you the best returns, and you’ll also be able to focus much better. 

Tips for Trading Forex Pairs Successfully

Once you have identified your favorite pairs, you still need to develop good habits to preserve your capital and make profits consistently. Some of a few practical tips that will enable you to improve your results over time are:

• Keeping a Trading Journal: Record every trade you take. This will allow you to identify repeatable mistakes and correct them.
• Back test and Practice on a Demo Account: To be confident in the market, you need to practice and back-test new strategies. 
• Always Use a Stop-loss: Protecting your capital is the first rule in trading. Stop-loss placement with good sizing is an effective risk plan.
• Know the Sessions to trade: Know which are the most active sessions to benefit from tighter spreads and high liquidity.
• Have A Trading Checklist: Before opening a trade, check if your trading checklist aligns with the trading conditions. If not, wait for the next setup. 

Remember, choosing the best pair to trade does not mean profitability. You have to be disciplined, patient, and consistent to see results. 

Conclusion

When it comes to the best pairs to trade in forex, there is no universal answer. The right currency pair depends on your trading strategy, experience, risk tolerance, and preferred trading session. A forex pair that works for other traders may not be suitable for you, especially if you are a beginner. 

Smart traders always begin with major currency pairs that are liquid and have moderate volatility. These pairs offer tighter spreads and are very predictable. To see progress, take your time to learn price action, practice on a demo account, and understand how the market moves.

Understanding your currency pair is more profitable than chasing volatile pairs. Even the most profitable forex traders you know of focus on very few pairs. As you improve, you’ll find it easier to trade other volatile pairs with great confidence.

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