The Best Forex trading pairs to trade on Deriv

What is the best Forex pair to trade?

The forex market is one of the most liquid markets in the world. Over $ 5 trillion in currency transactions per day. But what is the most popular Forex pair among traders? If you are new to Forex Pairs, this article will help you understand the following concepts:

• What is an FX pair?
• Factors Affecting the Price of Forex Pairs
• The most popular forex pair
• How to Trade Forex Pairs on Deriv
• Frequently Asked Questions About Forex Pairs

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Type of Forex currency pairs

A pair of Forex shows the price of one currency against another. There are two currencies in one pair, the base currency (base currency) and the presented currency (quot currency). The base currency is the first currency of the pair and is the currency that the trader considers to rise or fall against the offered currency. For example, if you sell Japanese Yen vs. US Dollar (JPY / USD), that means you expect the price of Japanese Yen to fall against the US Dollar.

FX pairs can be broadly divided into three types:

Main pair

The major pair is the currency with the highest trading volume. Popular pairs include EUR / USD, GBP / USD and USD / JPY. The major pairs are widely popular from beginners to advanced players due to their high liquidity and small spreads.

Minor pair

Minor pairs, also known as cross-currency pairs, do not include US dollars. However, it does include widely traded currencies such as the Euro, Pound Sterling and Japanese Yen. Minor pairs are generally unpopular with traders due to their low liquidity and wide spreads.

Exotic pair

An exotic pair is a combination of major currencies such as the US dollar and euro with currencies of developing countries such as Brazil and Turkey. These pairs are not traded as often as the major and minor pairs, so spreads tend to be higher.

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3 main factors that affect Forex price

Before trading Forex pairs, it is important to understand the factors that drive the market. The factors include:

Financial policy

The decisions made by central banks have a significant impact on currencies. For example, changes in interest rates in a country affect the rise or fall of currency pairs. When a central bank raises interest rates, the value of the country’s currency rises, and when interest rates fall, the value of the country’s currency falls.

Economic stability

The value of a currency is closely linked to the economic stability of the country. Stable economies like the United States and Japan tend to attract a lot of foreign investment, which increases the value of the currency. On the other hand, if the economy is not stable, investment will be small and the currency will be weak.

Politics

Political events can have a significant impact on the strength of a currency. Brexit is a good example. Brexit has created great uncertainty in Britain’s future economic outlook, and traders have lost confidence in the pound. As a result, the value of the pound has fallen sharply against other major currency pairs.

Forex pair price movements are influenced by a variety of factors, including the country’s economic strength, geopolitical events, and monetary policy.

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4 most popular Forex pairs on Deriv

The most popular Forex pairs among traders are the major pairs offering high liquidity and low spreads. Below is a list of the four most traded currency pairs:

EUR / USD

This currency pair is called “The Fiber” and is the most traded pair in the world. It’s not surprising considering that these currency pairs make up more than 24% of the daily forex market transactions and are the currencies of the world’s two largest economies. This pair is a good option for novice traders due to its high trading volume, low spreads and low volatility.

USD / JPY

Known as “The Gopher”, this currency pair is one of the most popular pairs among traders. Like EUR / USD, it is highly liquid and has low spreads. This means that traders can buy and sell this currency pair without experiencing significant fluctuations in exchange rates. (What is spread cost and how can I view/calculate in real-time on Deriv?)

GBP / USD

The pound sterling / US dollar currency pair, also known as “The Cable,” is widely traded. This currency pair is more volatile than “The Fiber” or “The Gopher” due to frequent price fluctuations. This volatility is preferred by certain traders as it provides an opportunity to generate greater returns. However, it can also incur significant losses.

USD / CHF

The currency pair of the US dollar and the Swiss franc is also known as “Swissie”. Switzerland is not the world’s major economy, so it may seem surprising at first. However, this currency pair is popular because Switzerland has a high reputation as a “safe country”. Due to the stability of the financial system and government, traders use the Swiss franc when the economic outlook is uncertain. Although less liquid than other major currency pairs, it is still a popular currency pair among traders.

Some currency pairs have less volatility than other currency pairs. For example, currency pairs such as EUR / USD, GBP / USD and USD / JPY are generally considered to be one of the least volatile currency pairs due to their high liquidity trading. For those who want to reduce risk, it is better to trade major currency pairs such as those mentioned above, rather than volatile and unpredictable minor and exotic currency pairs.

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How to Trade Forex Pairs on Deriv?

Deriv allows you to trade around 100 currency pairs, including major, minor and exotic pairs. List of FX pairs Deriv provides is here is.

1. Investigate and analyze which Forex pair you want to trade.
2. Log in to your account and select the Forex pair you want to trade.
3. Decide whether to buy or sell.
4. After opening a position, carefully monitor your transactions and evaluate their performance.
5. If your trade forecast is correct, you can get a return. If the prediction is wrong, you will incur losses.

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Is Forex trading safe for everyone?

Forex trading is not guaranteed to be profitable and you may lose some or all of your investment funds. However, there are things you can do to mitigate the risk and reduce the potential for loss. Here are some of the ways:

• Deepen your knowledge by taking a trading education course such as Deriv Academy.
• Use established and regulated brokers.
• Create a trading plan to establish clear rules for making Forex trading decisions.

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