Major currency pairs are most favorable for trading Forex in market

Major currency pairs are those paired up with the USD, in which case the dollar could be the base or the quote. Here are examples of the common seven major currency pairs: EURUSD, GBPUSD, AUDUSD, NZDUSD, USDCAD, USDCHF and USDJPY. These major currency pairs account for the biggest share of transactions on the Forex market with the following four leading from the front: EURUSD, USDJPY GBPUSD and CHFUSD.

If you are trading any of these currency pairs you are sure to experience the benefit of high volatility in the market and low spreads from your broker. These two advantages enhance your chances of success in Forex trading as explained below:

Benefit of high market volatility

Basically we need price movement in the market to be able to execute trades. If there wasn’t any movement in price on the trader’s chart trading would be impossible. Volatility is the variance in price of a given trade instrument over time, which is represented on the MT4 chart as it unfolds. A significant level of volatility provides traders with numerous opportunities to trade the Forex market as price will always be on the move. These major currency pairs present you high rate of volatility especially when one of the currencies on a given pair is in its active market sessions.

As a result of the high volatility in the major currency pair markets, price seems to obey price action rules and you can certainly predict its direction. This fact makes these seven major currency pairs a favorite for scalpers and technical traders because they are high probability markets. You will notice all nature of indicators perform better on these major pairs as opposed to the case with Cross currency pairs or even the exotic currency pairs.

This is the benefit of trading major currency pairs in the Forex: their markets are highly volatile.

Benefit of low spread

A spread is a charge you incur each time you place a trade on the market. This charge is stated in pips and its monitory value is proportionate with the lot size of your trade. Spread is then subtracted from your account equity immediately your trade is taken into the market. The advantage of trading major currency pairs is they always have low spreads across all brokers. Some brokers even charge you less than 3 pips for the major pairs which is highly appealing to technical traders as opposed to 7 to 10 pips on cross currencies. The spread can really take a toll on your equity if you are a scalper trading big lots hence you always want to stick to major pairs to avoid such draw downs.

Wrap up

If you are new in Forex market trading can be highly expensive considering the spread charges and highly unpredictable when volatility is insignificant. You therefore want to increase your probabilities profiting in trades by choosing the most favorable market. This is simply by trading the major currencies and in this way you will be on arguably safer side of the market.

Categories: Forex terms, Tutorials


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