Majors or the minors; spend time watching them
The vast majority of all Forex Trading is placed on the major
currency pairs representing the largest economies in the world.
These currencies are incredibly liquid 24 hours a day making
them ideal markets for technical and fundamental traders and
perfect for those wishing to avoid potential large gaps in prices
that occur more commonly in stocks and other markets that close
Major currency pairs
The major currency pairs traded are:
Tip: You'll find the tightest spreads on the
EUR/USD, GBP/USD, AUD/USD and USD/JPY.
Liquid 24 hours a day, 6 days a week
The highly liquid nature of these currency pairs means that many
Forex Brokers offer very tight spreads and high levels of leverage
(see leveraged trading) making them ideal for day traders and
longer term speculators alike. Trading platforms from these
providers have developed into highly advanced systems that allow
access to a wide range of risk management tools as well as
comprehensive research, both technical and fundamental.
Before deciding on which pair to trade it's important for you to
understand what the potential volatility of your choice could be.
Very recently we saw the Swiss National Bank devalue the Franc
resulting in a move in the Euro versus the Swiss Franc of 8% in
less than three minutes! Whilst this is extreme, it serves as a
useful reminder that just because a currency pair may have had a
narrow trading range recently it is possible for an economic or
world event to result in wild moves for the market.
If you are over extended, perhaps you have leveraged yourself
too much or are trading too many markets at once, the consequences
can be disastrous. Many Forex brokers will provide access to
historical charts enabling new traders to gain a better
understanding of how markets may have moved in the past and to
select a suitable stake for future trades. Ensuring that you are
fully briefed about economic releases that may affect the
currencies you are trading is essential and so ensure you take
advantage of the economic calendars that so many providers now
carry on their websites as standard.
The minor currency pairs, whilst not as widely traded as the
majors, still have a loyal following of experienced traders who
have studied and who understand the factors that are likely to
cause fluctuations in their price.
The minors are usually less liquid than other pairs and so
generally carry wider spreads and less attractive leverage rates.
This means that the cost of trading these currencies is higher than
the more popular major currencies and so for the new trader they
are probably not the most suitable of markets to begin trading. In
addition, the amount of publicly available information about the
relevant economies or policy decisions is unlikely to be as
extensive as it is for the majors and so the volatility of these
pairs can be increased as result.
Have a mobile trading option if you are away from your PC
If you are about to open an account with a Forex broker, take
time to review their spreads or commission rates for the major
currency pairs, their risk management tools and if you are going to
be able to access a news service to keep up to date with key
announcements. It's also worth thinking about a mobile trading
solution if you are often away from your PC and will want to keep
track of prices, your open positions and potentially trade whilst
on the move. Once you have found the right broker for your trading
requirements take some time to look at historic volatility of your
chosen currency pair and select your stake carefully to reflect
your appetite for risk.
Finding the right company for your style of trading is very
important and with over a dozen providers regularly advertising
their products there is plenty of choice for new and existing
clients. Much of the decision making process will be around the
trading technology on offer, the product range, charting package
and ease of account opening. Our unique comparison table gives
insight into the services on offer and provides an easy reference
guide when deciding who best to trade with.
Further resources on Forex trading
Comparing Forex brokers
Below is a table of Forex brokers with a few key account-opening
criteria that we believe should be considered when you are deciding
which broker to open an account with. It's not always about price;
finding a broker that suits your style of trading and your
technical requirements is as, if not more, important than shaving a
few pence off of your dealing costs.
Start comparingForex brokers