Trading Several Currency Pairs - is it a Mistake?

Forex currency exchange market is a highly risky market and currency pair is always an issue that calls for discussion. The issue here lies in the fact that a forex trader should trade in a single currency pair or multiple currencies at the same time. Well, it is indeed a critical issue. Sticking to a single currency pair would minimize your scope of profit making. However, that does not certainly mean that you should trade in a large number of currencies. Trading in manageable number of currencies that have a high profit potential is perceived to be the best idea.

In this article, we will give you a valuable insight into the most lucrative currency pairs and also we will throw light on the currency pairs that should be avoided. These tips are especially meant to be followed by the beginners who do not have the expertise to deal in several currencies at one point of time.

Best Currency Pairs for forex trading

Though, there are many options of currency pairs but if you are a beginner, then we would advise you to focus on the prime pairs which are mentioned below:

USD/EUR

USD/JPY

USD/GBP

Reasons to Go For These Particular Currency Pairs

•Each of these currencies is traded extensively and therefore there is high liquidity in the forex currency exchange market. These currency pairs offer you a better scope to derive benefits resulting from frequent fluctuations in the value of these currencies.

•These currencies have a broader range of price as compared to other pairs of currency. They have tighter spreads and therefore they are preferred over others.

•Most of the forex trading systems work for these currency pairs and so you can derive the innumerable benefits of expert advisors.

•Each of the above mentioned currency pairs involves the US dollar and therefore trading can be carried out only during the trading session of New York when there is maximum volume of forex currency exchange trades.

Beginners should completely avoid trading in currency pairs that are very uncommon. If you trade in uncommon currencies, it is likely you will incur heavy losses because of lack of knowledge.

Some of the currencies which are safe to trade in as well as are good options from the perspective of earning profits are Euro, British Pound Japanese Yen, Australian Dollar, US Dollar, Canadian Dollar and Swiss Franc.

It is recommended especially to the novices to avoid trading in currency pairs having high spreads, as they are quite volatile and therefore the risk of loss of money is high. These spreads tend to vary from one forex broker to another. Currencies that have high spreads have a very wide range of price and it is quite difficult for a beginner to deal with such currencies.

Dealing in several currencies at one point of time is not a good idea because it is tough to keep track of the price fluctuations of each of the currencies and this is where beginners suffer a heavy loss and ultimately vanish from the forex currency exchange market. So, beginners should go slow and steady; however veterans can trade in more than one currency and it is recommended to trade only in those currency pairs that have high profit potential.

Article courtesy of eToro