Are the most popular currency pairs the best to trade?

  • Euro — US Dollar (EUR/USD)
  • US Dollar — Japanese Yen (USD/JPY)
  • British Pound — US Dollar (GBP/USD)
  • Australian Dollar — US Dollar (AUD/USD)
  • US Dollar — Swiss Franc (USD/CHF)
  • US Dollar — Canadian Dollar (USD/CAD)

From the same report by Regal Core Markets, “the values of these major currencies keep fluctuating according to each other, as trade volumes between the two countries change every minute. These pairs are associated with countries with greater financial power and the countries with a high volume of trade conducted globally. Such pairs are the most volatile ones, meaning that the price fluctuations happening during the day can be the largest.”

But does this mean that these pairs are the best to trade? Not necessarily, as traders can either lose or make profits on the volatility. The pairs mentioned above tend to have the best trading conditions as their spreads can be lower.

According to a research paper written by Rabin Bhandari, “The Currency market (or Forex market) is a very volatile and liquid market among all the financial markets. Currencies are priced in pairs and are traded in pairs. It is useful to know from an investment perspective, regarding the movement they share with each other i.e. whether they move in the same direction or in the opposite direction. Once the correlations between these pairs and their movement pattern are known, it can be used to control the overall portfolio’s exposure.”

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