How do you figure out which are the best currency pairs to trade in Forex at any given time? Watch our latest video and find out which are the most volatile currency pairs in 2019.

Best currency pairs to trade in Forex – beginner’s guide

Knowing which currency pairs to trade. How do you figure out which currencies to trade at any given time? Well, the answer is by knowing your fundamental analysis. Now, fundamental analysis is the underlying reasons for why a currency is being either bought or sold. Now, I recently purchased a car for my family. Now, I didn’t just go out and buy the very first car that I saw for sale. No, I did my research, I wanted to get the car that met my criteria. I wanted a car that had a good safety record, for my family, was suitable for long journeys, etc. So, after my research, I then looked at getting a good car at a good price.

Now, buying and selling currencies is done by exactly the same principles. You need to focus on the reasons for why people are buying or selling currencies. And fundamental analysis is the way that the vast majority of professional firms trade. In fact, many firms invest thousands and thousands of dollars in getting up to date market news, straight into their trading desks. Every day, I myself, will look at Bloomberg and Reuters feeds, in order to help me to decide which currencies to trade. Fundamental analysis is the reasons why a currency is moving the way it does, and you want to be buying the currencies that have fundamental reasons to be bought and selling the currencies that have fundamental reasons to be sold. And the very best trades are when you pair up a strong currency with a weak currency. It’s common sense, really.

So, for example, if one Central Bank surprises a market by raising interest rates, that currency will likely appreciate and if at the same time, another Central Bank surprised markets by cutting interest rates, that currency will likely depreciate. You would them pair these currencies with opposing outlooks against each other, as your tradeable currency pair, and you would almost certainly make a very healthy profit in that extreme example. Obviously, that is an extreme example, but the principle is important. Pair up weak currencies against strong currencies and vice versa, to get the best trades. And the fundamental price of each currency is based upon the expectations of the market. What’s going to happen next? What’s the mood of the market, on any given individual day? And all market expectations and move revolves around what the Central Bank is going to be doing next. So, the Central Bank should be your focus.

Let me give an example, recently, which happened just on Friday. Gone. It was the Nonfarm Payroll day and president Trump tweeted, in a not very subtle move, he said, “I’m really looking forward to the job numbers today” and canny traders were eyeing the job report and canny traders were actually thinking, “Hang on! If president Trump is saying I’m looking forward to the jobs reports today, he’s obviously already seen the data, so we can expect the US dollar to appreciate into the jobs report.” And sure enough, from the morning, as soon as president Trump issued his decree, the Dollar/Yen was appreciating all through the London and New York session, as traders awaited the Nonfarm Payroll. So there’s a good example of knowing what to trade, knowing what the market is thinking and trying to preempt the next move by the Central Banks.

So, each day look, what’s the latest news out for each currency? Has there been any top tier data released? What does that mean? What’s the Central Bank focusing on? Is it important data, that’s been released? And if it is, look to trade that currency pair, against an opposite pair that should go in the opposite direction. By doing this, and then only applying your technical strategy to these currencies, you are rapidly and increasing your odds and chances of trading successfully every single day.