4 Ultimate Ways To Choose The Right Currency Pair In Forex For More Profit

                                                               

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Selecting the right currency pair is the key to success and has an edge over others who have chosen the wrong currency pairs. The aim of this article is to help you choose the right currency pair/s so that you have a better chance of success in forex market.

Liquidity

The first thing for a trader is to look if the currency pair to be chosen has enough liquidity i.e. it has got sufficient buyers as well as sellers at any time in the market. Liquidity enables to close your position any time you like. On the contrary, if liquidity is not sufficient then the buyer may have a very tough time to close position if the situation demands so all on a sudden. So, you must make sure if the concerned currency pair is traded in large volumes in all sessions over 24 hours a day.

What is the Spread

Unlike the stock brokers the forex brokers earn commission in a different manner. The stock brokers get commission either on the total volume or amount or per transaction basis, as applicable in the contract between a broker and a investor.

Whereas, the brokers in the forex market are paid something called spread. The spread is actually the difference between ask and bid price. Ask is the price at which a broker sells to the investor and bid is the price at which the broker buys from the investor of a currency pair. 

A currency paid lacking liquidity usually tends to have a higher spread compared to one which has high liquidity. 

The lesser the spread the more profit for the investor. A trader should always check that the normal spread is not more than two to five pips. Observed, spread of major currency pairs may increase surprisingly even upto twenty five pips before important favorable economic releases of Governments.


How the Currency Pair Behaves

Each and every currency pair has its own unique pattern of behavior. Observed, Euro/USD pair is usually more stable than GBP/USD pair. For a day trader more eratic movement in a currency pair may be preferable than a movement which stays a trend. 

Because, if a day trader likes to act on the basis of good news, it will be a great opportunity before vital economic releases from the government, as his/her targeted currency pair will be likely to react sharply. 

Desirable and Topmost Currency pairs

Despite the recession suffered by U.S. economy very recently and despite the fact that it has not been fully able to recover from it yet, still U.S.Dollar remains one of the strongest currencies of the world having high liquidity.

Consequently, terrific trading opportunities may come before traders when U.S.Dollar is paired with other strong currencies like GBP, Euro or JPY. 


Based on liquidity, volume and confidence reposed by people in the currencies of these Governments, GBP/USD, EUR/USD and JPY/USD are still regarded as the world's most popular and reliable trading pairs among traders in forex market.