How to choose a currency pair
To reach the level that allows a trader to earn stably, it is necessary to go a long way. Study of theoretical material and increase of financial literacy, acquaintance with methods of analysis of market situation, creation of own trading system and its testing – all these are basic components of successful trading. One of the main issues that a trader will have to solve is the choice of a trading instrument. At first glance, it may seem that it is not so important what currency pair to trade. But it’s not really true. And you’ll see that by reading the article through to the end. If you choose the right currency pair, you can increase the efficiency of trading.
What to pay attention to when choosing a trading instrument
The brokerage companies have made sure that the trader can choose the best trading instruments for himself. MT4 offers a wide range of currency pairs. Some of them are leaders in popularity among traders. But it doesn’t mean that you have to trade these very currency pairs.
For the effective solution of the question on the selection of the currency pair one should consider several factors.
If the trading system is created for trading on the active market, you should select high-volatile currency pairs. These include the euro/dollar, pound/dollar and the Japanese yen pair.
If the trader prefers conservative trading and he is satisfied with a small profit, it is necessary to pay attention to currency pairs that behave relatively calmly. Examples are the Euro/Swiss Franc or New Zealand dollar/US dollar.
The next factor is trading time and activity of currency pairs. For example, if a pair of pounds/dollars was chosen for trading, its maximum activity is usually observed from noon until 6 pm in Moscow. If for some reason a trader can’t trade at this time, it means that we need to find another trading instrument. The time of its activity should coincide with the opportunities for trading a trader. For those who prefer to trade at night, the best choice is a pair of yen.
I don’t recommend using multicurrency trading for newbies. You can come to her later. To start with, you need to select the currency pair and study it in detail. Each trading instrument has its own peculiarities. You have to know about them. And this applies not only to charts, but also to economic indicators, which have a significant impact on the rate of a currency pair.