The Best Currency Pairs To Trade Right Now (Definitive Guide For 2018) — Forex Useful (2024)

This guide is going to show you the best currencies to trade in 2018.

You’re going to learn how to get an edge on your trading competition by focusing only on trading the currencies that suit you best.

So whatever type of forex trader you are - whether you’re a day trader, trend trader, swing
trader or scalper - this guide has something for you.

Let’s get started!

So, what’s the best currency pair to trade right now?

We get asked this question a lot.

It would be great to be able answer it with just one currency pair.

One currency pair that was the best to trade for all people, all strategies, all timeframes.

EURUSD for example.

Or GBPUSD.

Or whatever.

But it’s not as simple as that.

Instead, what you really want to know is:

“what is the best currency pair for you to trade”.

That’s a key difference.

There are hundreds of different currency pairs out there.

And there is an infinite number of ways to trade them.

It’s not a case of “one-size-fits-all”.

Say you are a carry trader. The best currency for you to trade right now will be one with a clear interest rate differential.

Are you are a scalper? Well then, a currency pair with a low spread will be a must for you.

Same for it daytraders. Swing traders. Range traders.

The all need different things from the currencies they trade.

Do you get the picture?

The best currency for one trader won’t necessarily suit another.

That’s what makes this guide different.

Whatever kind of trader you are - we’ve got you covered.

We’ve set out the best currency pairs for every kind of trader we can think of.

Let’s kick off with currency pairs for beginners.

The Best Currency Pairs To Trade For Beginners

If you’re just starting out in forex trading, you need to give yourself the best possible chance of success.

You don’t want to jeopardise your entire trading career just because of a few stupid mistakes.

So, as a new trader, you need to know:

• what currency pairs to focus your energy on, and
• what currency pairs you should run a mile away from!

New traders should focus exclusively on currency pairs with:

• Low spreads
• High liquidity
• Low volatility

In general, the major currency pairs tend to meet these criteria.

So, if you are just starting out, stick to pairs that include the US dollar.

Good ones to cut your trading teeth on include:

• EURUSD
• USDJPY
• GBPUSD
• AUDUSD

See all those currencies on your platform like the South African Rand, Russian Rouble and the Brazilian Real? Steer clear of them until you master the basics. They have less liquidity, higher spreads, and can be extremely volatile.

If you are learning how to drive, you don’t start in a Formula 1 car. Because if you get something wrong, it might kill you.

Trading is the same. If you are starting out, you don’t need to make things any more difficult
than they already are!

Once you master the major currencies, you can start looking at other, more exotic pairs.

Just a quick tip - if you are just starting out with your trading, don’t forget to start using a forex trading journal right from the very start. A journal can have an astonishing impact on how quickly you learn how to make money on a consistent basis.

What Are The Best Currency Pairs To Trade At Night?

The currency markets are open for business 24 hours a day (apart from the weekends).

So currency trading is popular with people who want to trade in the evenings when they get
home from work.

The problem is, if you are based in the US or Europe, your night-time will be during the Asian trading session.

During the Asian session, the big US and London traders are usually offline. Because the majority of the big banks and institutions are based in Europe and the US, the markets can be very quiet during the Asian session.

If a market is quiet and not moving very much, it can be difficult to make money!

The other downside of a quiet market is that if something unexpected happens, sudden jumps in volatility can happen. And volatile spikes aren’t exactly easy to trade either!

If you are trading at night (during the Asian session) you should try to stick to the pairs that are liquid at that time of day.

Usually these will the currencies that belong to the countries that are open during the Asian
session - so the Japanese Yen, Australian Dollar and the New Zealand dollar, for example.

If you stick to pairs like:

• USDJPY
• AUDUSD
• NZDUSD
• AUDJPY
• NZDJPY

you shouldn’t go too far wrong!

But what if you are based in one of the countries that are active during the Asian session?

Well if you are, you and you want to trade at night - you’re in luck!

Because your night will probably be during the London session and the US session - and that’s when liquidity is best!

Forex trading is great because it allows people to trade 24 hours a day.

But the currency markets behave very differently depending on what time of day it is and the
different forex market hours - so just make sure that you understand what is happening, at your time of the day, before you dive in.

What Are The Best Currency Pairs For Liquidity?

Here are the best currency pairs for liquidity:

• EURUSD - 23%
• USDJPY - 17%
• GBPUSD - 9.2%
• AUDUSD - 5.2%
• USDCAD - 4.3%
• USDCNY - 3.8%
• USDCHF - 3.5%
• USDMXN - 2.1%
• EURGBP - 2.0%
• EURJPY - 1.6%
• USDSGD - 1.6%
• USDKRW - 1.5%
• USDHKD - 1.5%
• NZDUSD - 1.5%
• USD/Emerging Markets - 16.6%

These figures from the Bank of International Settlements. You can find the report here.

Liquidity is vital when it comes to trading any market.

As a trader, you’ll want to know that if you want to sell, there will be somebody ready to buy.

And vice versa.

Luckily, the forex market is one of the most liquid markets in the world, so it’s unlikely that you’ll ever be left with Euros to sell and nobody to buy them from you!

But liquidity is important for other reasons too:

• Currency pairs with higher liquidity usually have low spreads. That means you pay less to your forex broker when you want to open your trade.
• Higher liquidity currency pairs usually have better execution, meaning that you are more likely to get your trade opened at the exact price you want.
• High liquidity pairs are also usually less prone to stop-hunting, price spikes and other market gyrations. That goes in favour of the trader too.

As you can see from the table above, EURUSD is the most liquid currency pair by some
distance.

So, if your trading strategy relies on low spreads and high liquidity, EURUSD is the one to go
for!

And remember, just because a currency has high liquidity, it doesn’t automatically mean that it will have a low spread. So do your research and check with your broker before opening any trade on a pair for the first time.

There’s no worse feeling than opening a trade and realising that the spread was 5 times bigger than you were expecting it to be!

What Are The Best Currency Pairs For Day Trading?

Day traders aren’t interested in hanging around.

They want to get their trades open and closed within one day. No holding trades overnight.

Day traders fear one thing more than anything else - a flat market.

Everyone finds it tough to make money in a market that isn’t moving very much, but for day traders it’s especially perilous.

If the market isn’t moving, it’s really hard to:

• get a trading setup to trigger
• get it into profit, and
• get the trade closed

all in the space of a few hours!

So day traders will be interested in pairs that tend to move quite a bit over the course of a trading day - and they’ll want pairs that don’t have very large spreads that eat into their profits.

Lots of movement + low spread = best currency for day trading!

One pair that consistently satisfies these requirements is GBPJPY.

It has averaged around 140 pips movement per day so far in 2018.

And with some brokers, you can trade it for as little as 2.5 pips spread.

If you’re a daytrader, that combination will be music to your ears!

The Best Currency Pairs For Scalping

If you’re a scalper, you’ll be taking a lot of trades.

And with every trade you open, you’ll be paying a few pips to your broker in spread.

To say that those spread payments add up would be a massive understatement.

Because as a scalper, the amount you pay in spread to your broker could literally be the difference between failure and success.

For example:

• Say you make 20 trades a day, scalping the market. After all, you’re a busy trader - getting in and out whenever you see an opportunity.
• Say you’re trading AUDNZD, because you like the look of the chart right now.
• And your broker charges you 2.9 pips spread on each trade.
• That’s 58 pips per day.
• Or 1,160 pips per month!

And that’s before you make any money.

Yes, you have to make 1,160 pips per month - just to break even!

• Say you decided to scalp EURUSD instead.
• Same deal - 20 trades per day, but instead of 2.9 pips per trade, your broker is charging you 1.2 pips per trade.
• In that case, you would have to make 480 pips per month to break even.

(Still not easy, but easier than 1,160 pips on AUDNZD!)

That’s why spread costs are such a big factor for scalpers.

A slight difference in spread could be the difference between profit and loss.

So what’s the best currency pair for a scalper?

Nine times out of ten it will be the one with the lowest spread - usually either EURUSD or USDJPY.

On the other hand, if you’re scalping on a currency pair with a high spread - you better be very selective with the trades you take. If you take a lot of trades, the amount you pay to your broker every month will be huge.

Your broker will love you, but your profit and loss statement won’t thank you for it!

What Are The Best Currency Pairs For Trend Trading?

There’s nothing better than having a trade in a market with a strong trend.

Your profit just grows and grows. 🙂

The challenge is being able to identify a trend just when it is about to start.

It’s impossible to predict when a trend is going to start in advance. If you could do that, you
could print money!

The other option is waiting for the trend to develop before entering your trade.

The problem with that approach is how do you know if the trend is about to come to an end?

If you’re confused, it’s not surprising.

Everyone makes it sound like trend-following strategies should be easy, but it’s not!

The easiest way to find the best currency for trend trading is to use multiple timeframes.

Our 3 Little Pigs Trading Strategy is a multiple timeframe trading strategy.

It figures out the direction of the long term trend first, then the medium term trend.

It everything lines up, it then uses a lower timeframe for trade entries.

The second way to identify the best currency for a trend following trade is a bit counter-intuitive.

You look for a currency pair that is currently in a range.

Let’s look at an example.

One pair that we covered extensively on Forex Useful a few years ago was GBPCAD.

It was in a tight range for years, as you can see.

And guess what happened when the range broke?

Yes, one of the nicest trends you ever saw!

If you would like to use the 3 Little Pigs Multiple Timeframe Strategy to identify the best currency pairs for trends, you can get a free copy of the strategy by signing up here.

Our Forex Useful Elite package comes with a 3 Little Pigs MT4 moving average indicator, scanner and EA. You can find more information about our Elite Package here.

What Are The Best Currencies For Range Trading?

Currency markets range a lot.

Some traders say that currency pairs range for about 70% of the time.

You’ll notice how, unless there is some large fundamental driver at play, currency pairs are perfectly happy trading between defined levels for days, months, or even years.

Unlike stock markets, which can trend for years and years on end, ranging is the forex market’s most natural state.

Forex pairs pit the currencies of two countries against each other.

Countries naturally go through times of economic strength and weakness - no country’s currency will strengthen (or weaken) forever. They fluctuate, they go up and down - and that’s what causes all the ranges in the currency markets.

So how can you find a good currency pair for a ranging trading strategy?

It’s easy.

Open up a chart, zoom out and see if you can find any natural areas of support.

Then see if you can find any obvious areas of resistance.

Once you’ve got both, boom - you’ve got yourself a range.

(These areas of support and resistance must be obvious. If you find yourself squinting, move on to another pair!)

The best way to trade the range is simply play the edges - sell at the top and buy at the bottom.

But bear in mind, no range lasts forever.

In recent years, the Swiss franc has been the darling of the range traders. Especially EURCHF.

The Swiss National Bank has been periodically intervening in the market to keep the franc from strengthening too much.

But then they decided to stop the policy and the floor on currency pairs such as EURCHF and USDCHF gave way.

The range broke quickly and it caused carnage in the markets.

So, range trading is a great strategy as long as the range stays intact.

But as soon as the range breaks, you should step aside and wait for a new one to form. Once a new range has been established, you can get back to buying at the lows and selling at the
highs.

What Are The Best Currencies For Technical Analysis?

Technical analysis is a great way to get a feel for what is going on in a market.

You can use charts, trendlines, forex chart patterns, moving averages, forex candlestick patterns (and a multitude of other tools) to help you to decide whether to buy or sell.

But there’s just one problem - no technical analysis tool works all of the time.

In fact, because markets change all the time, it’s hard to even predict how often a technical analysis tool might work in the forex market.

So, is there any way to know what currency pair responds best to technical analysis?

Well, there’s no firm data available that gives a definitive conclusion (if you come across any, please let us know!).

But we can give you some anecdotal suggestions.

Back when technical analysis first emerged as a discipline in the early 1900’s, it seemed as though it “worked” better that it does nowadays.

These days, because everyone has access to technical analysis, it doesn’t seem to work just
quite as well.

For example, a clear technical level on a chart (support or resistance) seems much more likely to get tested and temporarily broken now, than perhaps a few decades ago.

Stop-hunting - the practice of large traders targeting clear technical areas to “flush out” other traders’ stop-loss orders, feels very common now.

Bull and bear traps feel like they happen all the time now too.

As a result, in modern markets you have to be prepared for technical levels to be challenged
regularly.

It doesn’t mean that technical analysis is useless - far from it.

It just means that we have to understand that challenging technical levels is part of the trading game now - we have to expect it to happen.

All of this can be frustrating for traders who rely on technical analysis for their trading.

So what currency pairs are most suitable for technical analysis?

Well, liquidity is always key consideration, so stick with the pairs with good liquidity (and perhaps consider avoiding trading during the Asian session or low-volume holiday periods).

You also avoid trading around scheduled news events if you are relying on technical analysis to make trading decisions.

No technical level is strong enough to withstand a big news event - no matter how obvious it is on your chart!

Let’s Wrap Up Our Guide To The Best Currencies To Trade

That’s it for this guide on how to choose the best currencies for your trading.

As you can see, there is a lot to think about before making any decisions about what is the best currency to trade for you.

Before making your choice, you need to take into account where you live, what time of the day you are trading, how often you trade, your style of trading, and a whole lot more!

If you are thinking about trading a particular currency pair, you also need to open up a chart and look at how it is behaving right now.

At the time of writing this article the US dollar has been trending strongly, right across the board.

But a couple of months ago, it was locked in a tight range.

So before making a final decision, open up your chart and see if your chosen currency pair is moving sideways or trending strongly in one direction.

If you would like a selection of pairs that you can’t go too wrong with, you can check out the
infographic on this page. It gives you three of the best currency pairs to trade - each with good liquidity, low spreads, and good daily movement.

That’s it for this part of the guide!

See you in the next section!

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