How to Identify Promising Currency Pairs for Your Forex Trading Strategy

When you begin trading foreign exchange, one of the first things you’ll have to do is decide which currency pairs you’ll trade.

There are so many different currency pairs out there, and all of them can be traded as part of a forex strategy. If you’re just starting out with your forex trading strategy, though, it can be hard to know which ones are best. With so many different possibilities out there, how do you know which currency pairs will give you the best opportunity for success?

There are hundreds of currency pairs that you could potentially trade, but not all of them will be useful for a particular trading strategy.

In this article, we’ll take a look at some of the things that you need to consider when choosing your forex trading strategy and also give some examples of good and bad currency pair choices.

 

Identifying Your Strategy’s Key Requirements

Before you can even begin to choose your currency pairs, you need to understand your overall forex trading strategy.

Your strategy is going to depend on what type of trader you are and what your personal goals are. If you are an aggressive forex trader, you’ll probably be looking for pairs that have a higher risk and volatility.

These are pairs that will have increased fluctuations and greater price movement. You’ll probably want to avoid the pairs that are consistently moving up or down at a slow rate. Instead, you want to focus on the pairs that show a lot of movement and volatility.

These are the ones that will have a lot of opportunity for profit, but also a lot of risk. Conservative traders, on the other hand, might not want to focus on pairs that have high volatility and risk.

An aggressive trading strategy isn’t the best choice for everyone, and some people should focus on more “steady” strategies. The conservative trader is going to want to focus on the pairs that are moving slowly and steadily.

These are the pairs that aren’t likely to have a huge amount of profit potential. They won’t have as much risk, but they also won’t have much reward.

 

Currency Pairs to Help You Achieve Your Strategy’s Objectives

Once you’ve got a general idea of what you’re looking for, you can start to get a better idea of which currency pairs will best help you achieve your goals.

You’ll want to look for pairs that are moving in a way that corresponds with your strategy. For example, if you’re a trader who wants to focus on the “long side” of the market, you’re going to want to choose pairs that are consistently going up. You might choose the EUR/USD or GBP/USD, for example.

You should avoid pairs that are moving in the opposite direction or that are moving up and down at an even rate.

Similarly, if you’re an “aggressive short seller”, you’ll want to focus on pairs that are moving down.

You’ll want to avoid the pairs that are moving up or that are moving at a pretty even rate.

There are a few exceptions, but you’ll generally want to focus on the pairs that are consistently dropping.

 

Which Currency Pairs are Currently Trending?

Some of the best currency pairs to trade will be the ones that are currently trending. You’ll also want to look for pairs that are likely to trend in the near future.

To help you find these, you can use real-time forex charts. These charts will show you the latest price movement for each currency pair.

You can also use forex trend indicators to help you find the pairs that are trending. Keep in mind that the currency pair may not have been trending for very long.

The longer the pair has been trending, the more likely it is that it will continue to trend. You’ll want to look for pairs that have been trending for several months or more.

You’ll also want to look for pairs that are currently trending but seem to have a lot of momentum behind them. These are the ones that are most likely to continue trending.

 

Where Do the Big Players Trade?

One of the best ways to get a general idea of which pairs are best at the moment is to look at the trends of the “big players” in the forex market.

These are the large investment banks that make billions each year trading currencies and commodities.

By looking at the charts and statistics for the big players, you can get a general idea of which pairs will be moving in the near future.

You can’t always trust the big players, but they are usually correct most of the time. When you see them trading a certain currency pair, it’s usually a good idea to follow suit. The biggest players in the forex market are the ones with the most money to invest.

These are the investment banks and the large hedge funds that trade billions of dollars’ worth of currency every day.

By looking at the charts and statistics for the big players, you can get a general idea of which currency pairs will be moving in the near future.

 

Which Currencies Are Constantly Shifting in Relative Value Against Each Other?

Another good way to help you choose a pair is to look at the relative value of two currencies. For example, if one currency is constantly growing in value while another currency is constantly decreasing in value, there might be a correlation between the two.

There are a few different ways to help you identify which currencies are growing in value and which ones are dropping in value. One way is to look at the currency charts.

Each currency pair will have its own chart, and you’ll be able to see the movements of each currency over time.

You’ll be able to see when one currency is consistently growing in value while another currency is consistently decreasing in value.

Another way to identify which currencies are growing in value and which ones are dropping in value is to use real-time forex indicators.

There are a number of different indicators that will show you the relative value of each currency pair at any given time.

 

Which Currencies Are Showing an Independent Trend Over Time?

And finally, you can also identify the best currency pairs based on an “independent trend” over time.

This will be a little more subjective, because you won’t be able to see the real-time charts or charts over a long period of time.

Instead, you’ll have to look at the current values of the currencies and weigh them against each other. For example, let’s say you’re an aggressive trader and you want to focus on the “long side” of the market.

You’ll want to choose the pairs that are moving up and consistently increasing in value. You don’t want to choose the pairs that are moving up and down at an even rate. You want to focus on the currencies that are growing in value.

 

Conclusion

Now that you know what to look for in a pair, it’s time to start looking at some of the best combinations.

The first thing to consider is whether you want a pair that is trending or one that has been trending for a long time. If you want to trade with the trend in your favor, go with a pair that is trending.

If you’re more interested in pairs that have been trending for a long time, go with a pair that isn’t trending, but has been consistently increasing or decreasing in value over a long period of time.

Now that you know what to look for in a pair, it’s time to start looking at some of the best combinations.

The first thing to consider is whether you want a pair that is trending or one that has been trending for a long time.