How to Choose the Best Currency Pair for Forex Trading

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Currency Pair for Forex Trading

Everything around the world, whether living or nonliving, looks good with a pair, like a pencil with rubber, plate with spoon, sun with the moon, among other things. Likewise, in the world of trading, two essential terms are buying and selling of assets. And these assets are none other than currencies. Trade is accomplished using different types of money, and these should be exotic ones. The most used ones are probably the dollar and Euro, but apart from that, there are approximately 180 legal currencies globally. Out of these many, only 5% of them have a higher exchange rate.

Picking the correct currency for trading can be a daunting task for many beginners. But do you know the best pairs in the market right now? How do we choose the best, and why is it so imperative to select the best couple? How can we start trading in a brokerage firm like Z.com?

First, let’s understand the basics, starting from knowing the best currency to the best pairs among them.

What is a currency pair?

A currency pair is a mix of two different values. One value is slightly less potent than the other one. The first value is called the base, and the other would be the quote currency, and together they make the currency pair. There is a comparison between one value that is the base currency versus the quote currency. The base value is higher than the quote, and it means traders need to find out how much quote currency they require to buy one part of the base currency. Now how do we identify the money? For identification, we use an ISO code or three-letter code linked with the international market. For example, we use the code USD for American dollars.

  • A currency pair refers to a price quote of the exchange rate for different currencies in the trade market.
  • The pair is divided into two parts: base and quote. Base currency is bought while quote currency is sold in trading.
  • The most robust pair in the trading right now is EURO/USD and the second best is USD/JPY.

The foreign exchange market works on the currencies, and this market is the medium for selling, buying, and exchanging these currencies. All the investment and international trading take place because of these currencies. Base currency is bought, and quote one is sold, but these currencies are called pairs and cannot work singlehandedly. You purchase a team from the brokers and sell the quoted value and what you receive is from the trader is the base currency. Simultaneously when you sell the pair, you give away the base value and receive the quote currency. If you go for a good broker, they might get these responsibilities off your head. For instance, some features of Z.com Trade allow you to check base currency as well as make the transaction much smoother.

Trading takes place when you bid on something or sell an asset. The bid price is the buying price, and the selling price is the ask or the offer price of an investment. And a trader will buy the base currency in exchange for the quote currency or counter value.

What are imperative currency pairs?

The most robust pair and the most used currency pair in the trading market are EURO/USD. This pair is the most heavily traded liquid currency in the world right now. The value of EURO/USD is 1.2500, and this tells us that if we want to exchange one Euro, we have to spend $1.2500. Euro is the base currency, while Dollars are the quote currency. In other words, it will cost you $125 to buy euro 100. There are so many currencies globally, so are their pairs, and they change every day according to the market value. The money that trades the most against dollars is considered as one of the major currencies.

Some of the major currency pairs are:

  •  Euro
  • Japanese Yen( JPY)
  • British pound ( GBP)
  • Swiss franc( CHF)
  • Australian Dollar ( AUD)
  • Canadian Dollar( CAD)

Australian and Canadian dollars are considered as commodity currencies as these countries are rich in commodities. These pairs have the best liquid market and trading. What about those who do not compete with dollars. The currencies which are not compatible with dollars are called Minor or Exotic currencies. And they are sometimes called Crosses which have a wider spread than the major currencies. For instance, a euro with Japanese yen is a cross-currency. Simultaneously, the money with much wider spreads is called exotic, like USD with Singapore dollars.

Now, where can we trade this currency? Z.com is one such multi-asset financial trading firm. With 13 years in business, it offers forex trading, CFD, Spread Betting trading, Social trading, and Share Dealing trading. It is a global trading firm with headquarters in the UK. Sometimes it can be an overwhelming task to choose the best trading platform and for beginners to navigate through an online platform is utterly stressful.

This trading firm offers more than 250 tradable assets. There are so many advantages of using this platform, plus it provides so many features to ponder upon while researching.

Why should you go with Z.Com for Forex Trading?

  • You can navigate the website using 15 types of languages, and with that, communication becomes flawless.
  • It doesn’t matter if you are an experienced investor or a beginner; Z.com offers the best tools for everyone.
  • You can open a portfolio account popularly known as a demo account to understand the proper working of this trading platform.
  • You can utilize the advanced financial chart comparison tools with social and copy trading options.
  • Beginners can take guidance from top analysts. They offer you well-researched analysis on financial markets and various investment options.

FINAL THOUGHT

When it comes to trading strategies, these currency pairs are not constant. They change every week, and by changes, investment options vary. The trader must build up exquisite knowledge of the subject before choosing a pair to trade. The key is to look after the currency strength before investing in any asset.

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