When looking at currency pairs as a beginner to the forex market, there are a few things that you need to consider. For beginners, the most important aspects of a currency is generally stability and liquidity. The dollar is the most traded currency in the world, and though it would seem that it would create stability, other currencies do range significantly in relation to their value to the dollar.
Often called the Gopher , it is the second most commonly traded pair on the foreign exchange market. That being said, the patterns that JPY creates are fairly predictable, based on both time and season, so many traders can make quite a lot by learning more about its temperament.
The Japanese currency Yen is highly dependent on many global factors, such as the import of oil. Thus, an experienced trader will often be able to strategize regarding the market and commodity prices. Japan is also often uniquely hit by natural disasters and political issues; at these times, conscientious traders may need to get out of the market, as the currency can become quite volatile.
The Yen also tends to be either boosted or dragged down relative to the rest of Asia; for instance, China and Korea may both have a substantial impact on the trading activity and volatility of JPY. This is because JPY is often seen as a doorway to the east.
Many forex traders are known to use support and resistance level trading in order to better understand the market with this currency pair. Both of them tend to fluctuate very strongly based on commodities, but they tend to do it together, because similar commodities are traded.
However, there are notable exceptions; for instance, the United States oil industry has caused a divergence between USD value and CAD value, depending on where the oil market is within the United States at any given time. Thus, there are many differences in trading and commodities that a skilled and strategic trader can take advantage of.
The currency has reflected this by making marked and predictable gains against many other currencies, though there are also some significant shortfalls and financial collapses.
The United States Dollar is by far one of the most stable and predictable currencies out there. Traders in America will be able to anticipate many of the changes in global economic strength, such as issues surrounding presidential campaigning and other major economic shifts.
Similarly, those in Japan or Australia may want to focus on their own domestic currency to give them an edge. How to Find a Reliable Forex Broker. Make sure that you understand the risks involved and do not invest more than you can afford to lose.
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Best Currency Pairs Remember: With that in mind, here are the five best currency pairs for beginners. What is the best currency pair for me? You may have noticed that most of the best currency pairs include the USD.More...