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Jan 03, 2025
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The forex (foreign exchange) market is full of opportunities — its high liquidity and fast pace offer plenty of room for growth. But if you’ve ever wondered what the best forex pairs to trade were, you’re not alone. Choosing the right pairs can make all the difference, especially when you’re just starting out.
In this currency trading guide, we’ll look at the best currency pairs for beginners to trade, and share some practical tips.
Do you want to know how to trade currency pairs and earn on currency rate fluctuations? Our course for beginners is just for you.
Let’s start with the forex trading basics.
In the forex market, currency trading means buying one currency while selling another. Each pair acts like a single unit. When you place a trade, you’re either buying the base currency and selling the quote currency, or vice versa. When you buy a pair, you’re supporting the base currency and selling the quote currency, and when you sell, you’re doing the reverse.
Forex trading lets you take advantage of changes in exchange rates between two currencies. Traders can identify opportunities to profit from shifts in value across different time frames, manage risk, or even speculate on future trends. There’s plenty of flexibility to trade whenever it suits you.
Before we talk about the types of pairs and the best currency pairs for beginners to trade, there are several important considerations to keep in mind:
The forex market is the most liquid market in the world, with an average daily turnover of over $6-7 trillion.
There are four main trading sessions in forex: Sydney, Tokyo, London, and New York. Each session has different levels of volatility, liquidity, and trading opportunities.
The forex market operates 24 hours a day, but not all hours are equally active. The overlap between the London and New York sessions sees the highest market activity and provides the best trading opportunities.
Pairs are often correlated with each other. For instance, the EURUSD and USDCHF pairs tend to move in opposite directions because the US dollar is the base currency in both.
The collective mood or sentiment of traders has a strong effect on currency movements. For example, if traders are optimistic about a country’s economic prospects, demand for that country’s currency can increase.
Here are the types of currency pairs from which you will select yours.
Major currency pairs are the backbone of the forex market. Their main characteristics are strong liquidity and substantial trading volumes. These top forex pairs always include the US dollar and another currency from a major global economy.
For example, the euro (EURUSD), British pound (GBPUSD), Japanese yen (USDJPY), Swiss franc (USDCHF), Canadian dollar (USDCAD), Australian dollar (AUDUSD), and New Zealand dollar (NZDUSD).
Minor currency pairs, or "crosses," offer a fresh alternative to the more common pairs involving the US dollar. Instead of the dollar, these pairs connect two major currencies, where each has its own economic influence.
Some popular examples include EURGBP (euro/British pound), GBPJPY (British pound/Japanese yen), and EURCHF (euro/Swiss franc).
Exotic currency pairs combine a major currency with one from a developing or less-traded country. These pairs are more volatile and unpredictable.
Some popular exotic pairs are EURTHB (euro/Thai baht), USDTRY (US dollar/Turkish lira), EURTRY (euro/Turkish lira), USDSGD (US dollar/Singapore dollar). These pairs can make big moves, but traders should be ready for the added risk.
To help beginner traders, FBS analysts have reviewed the most traded Forex pairs according to three criteria:
Liquidity, which measures market activity through the number of traders and trading volume. Since financial centers around the world open and close throughout the day, liquidity in the forex market fluctuates but remains relatively high all the time.
Volatility, which shows the tendency of an asset’s price to change rapidly, frequently, and significantly. The lower a currency’s volatility is, the less prices change over time, which is better for a beginner. The reverse is likewise true.
Currency spread, which is the difference between the price at which a trader can buy and the price at which they can sell an underlying asset. Smaller spreads mean better conditions for traders.
This approach enabled us to identify the best currency pairs for beginners to trade.
EURUSD is arguably the best forex pair to trade.
The pair is highly liquid. Its approximate daily trading volume accounts for 28% of the market.
The pair is relatively stable, which can help traders avoid unpredictable price movements. EURUSD trading volatility is influenced by inflation, unemployment rates, and meetings and releases of the European Central Bank and the Federal Reserve. These economic events are easy to track using the Economic Calendar.
The spread for the EURUSD pair is typically low, especially during periods of increased liquidity. This means that traders can enter and exit trades with minimal trading costs.
It appeared on January 1, 1999, and was initially known as an “invisible” currency, used only for accounting purposes and electronic payments. Coins and banknotes were introduced on January 1, 2002.
GBPUSD is another contender for the best currency to trade in forex, and any broker is guaranteed to offer it.
Similar to the previous pair, GBPUSD is highly liquid and ranks among the top five most traded forex pairs. The approximate daily trading volume of GBPUSD amounts to 11%.
Due to its high liquidity, GBPUSD trading is considered low-volatility, making it less risky for trading than the more volatile currency pairs. However, it is important to stay informed of inflation, gross domestic product, the Bank of England meetings, and other economic releases that could potentially impact the pair’s price.
The pair’s high liquidity also ensures a tight bid-ask spread, resulting in minimal transaction expenses for traders.
USDJPY, also known as the “Gopher,” is another popular forex pair particularly suitable for beginners.
USDJPY trading is characterized by high liquidity, as evidenced by its daily trading volume, which reaches about 4%.
As with the previous pair, the USDJPY’s volatility depends on GDP growth, the Bank of Japan Monetary Policy Statement, trade balance, and employment data. Monitoring news from the USA and Japan is vital in building an effective and profitable strategy for this pair.
Another advantage of USDJPY trading is its tight spreads.
Next up is USDCHF - another one of the best currency pairs.
The high liquidity of USDCHF enables traders to execute trades without experiencing significant slippage. Roughly 5% of the daily trading volume is attributed to USDCHF.
USDCHF tends to exhibit relatively high volatility, particularly during the European and US trading sessions. Despite this, both currencies have safe-haven status, making this pair the least volatile during times of market instability.
For novice traders, it can be a useful instrument to trade in times of uncertainty. However, it is essential to consider news related to employment data, gross domestic product, and so on, of both the USA and Switzerland.
Another example of the best currency pairs for beginners to trade is USDCAD. With the right trading approach, beginners can benefit from this pair.
The high liquidity of USDCAD significantly affects trading. The pair’s daily trading volume accounts for approximately 5%.
The pair’s volatility is notable, especially during market sessions in the USA and Canada. Forex traders should closely monitor economic news from both countries, including employment data, gross domestic product reports, and others, to gauge potential impacts on the currency exchange rate. Moreover, since Canada is one of the world’s largest exporters, CAD positively correlates with the price of oil. Accordingly, USDCAD has a negative correlation with the price of oil.
The high trading volume of this pair results in relatively low spreads.
AUDUSD is popular in forex trading strategies because it’s easy to buy and sell due to high trading activity.
This pair is known for sharp price moves, driven by commodity prices like gold and iron ore, interest rate changes, or news from Australia, China, and the US. Its prices can jump during market changes, which makes it appealing for both short-term and long-term trades.
The AUDUSD pair also has low trading costs with tight spreads.
NZDUSD is particularly influenced by agricultural exports, especially dairy, which makes it sensitive to global trade trends.
Even though it’s not as liquid as some other major pairs, NZDUSD still sees steady trading, especially during the Asia-Pacific market hours. Its price movements are linked to economic data from New Zealand and the US, as well as shifts in risk sentiment globally.
NZDUSD typically has a relatively low spread.
AUDJPY is a mix of Australia’s commodity-driven economy and Japan’s safe-haven currency.
This pair has steady liquidity, especially during the Asian and Pacific trading sessions. It reacts to shifts in commodity prices, global risk appetite, and interest rate differences between the two countries.
AUDJPY is known for its volatility, which creates both risks and opportunities, especially during market shifts.
With typically low spreads, AUDJPY is a popular choice. Any good forex broker should offer it as part of their platform.
EURGBP reflects the relationship between two major European economies.
Both currencies are traded globally, which provides the pair with high liquidity, making it one of the best forex pairs to trade.
Volatility tends to be moderate, driven by economic data from the Eurozone and the UK, as well as political events like Brexit.
With generally low spreads, EURGBP is a stable choice for traders.
GBPJPY, also known as the "Beast" due to its unpredictable nature, reflects the economic interactions between the UK and Japan and the policies of their central banks.
This pair is highly liquid, which appeals to traders who value ease of execution even during volatile sessions. Its volatility is a defining feature, which is driven by factors such as interest rate changes, Brexit-related updates, and shifts in global risk appetite. GBPJPY reacts strongly to economic data releases and creates opportunities for swing and intraday trading.
Spreads for GBPJPY can be slightly wider than for major pairs because of its volatility.
For something more actionable, here are a few beginner trading tips:
Begin with small trades to manage risk while you’re learning. Get comfortable with the trading platform and focus on understanding the basics before you go bigger. To get better liquidity, try to find the best times to trade forex, when the major markets are open.
Learn how to read a forex chart and use technical analysis to spot trends. Study forex signals and technical indicators, but test them out first before relying on them too much. The more you practice, the better you’ll get at predicting price movements.
Always use stop-loss orders to limit your losses, especially if you’re using leverage. Risk management is key. Tools like a trading calculator can help figure out the right lot size, especially since pip values vary across pairs.
Don’t put all your money into one currency pair. Try to trade a mix of high-liquidity pairs and low-volatility pairs to balance risk and reward.
When it comes to forex for beginners, you want to follow central bank updates and other forms of forex news about interest rates, inflation, and geopolitical developments. This way, you’ll get a better idea of upcoming trends and changes in market sentiment.
To choose the best currency pairs to trade, a beginner trader should consider several criteria in their forex analysis: liquidity, volatility, and spread. High liquidity in a currency pair ensures tight spreads, while lower volatility means lower risks for a pair.
Forex pairs are highly volatile during the release of important economic data such as unemployment rate, inflation, GDP, and central bank meetings. Track these events in the Economic Calendar.
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