Guest Author - Jennifer Anderson
As you start your Forex career, or even if you are just testing the waters, you will want to focus on pairs that can provide you with the highest amount of profit without being as risky as some others are. The key is to know what your options are and to know which pairs of currencies are the best to focus on. With many different pairs out there in currency, it is easy to get overwhelmed and confused, long before you actually find yourself making a profit. For this reason, it is best to stick with the following three pairs because they provide the best results for most people.
The euro to United States Dollar is the best combination and it is the most popular pair for most people. It has the lowest spread that you will find in any currency trading. It responds well to basic technical studies of Forex, unlike some other forms, and this makes it easier for those who are new to Forex to learn how the system works. Under normal circumstances in the market, the EUR/USD pair is not necessarily volatile, unless there is some type of reason for this. More so, it has a strong global view and it is covered extensively. All of this equates to less risk and closer stops.
The combination of the Yen and the Dollar is often a good one for beginners as well. Here, you have about the same low spread as you do with the EUR/USD. This makes it a great choice for any investor. Second, it offers smoother trends and when you compare it to other pairs, this makes a significant different.
The final match up for beginners is the Great Brittan Pound to the Dollar. This pair moves largely and it can bring more pips in one simple move than either of the other two mentioned transactions. This is the pair to consider for breakout trading. However, there are risks associated with this pairing that need to be noted. You will need further away place stops and the pair can be quite volatile.
If you stick with these three pairs, you will find your inexperience with Forex trading is not nearly as hard to overcome as if you were using other trading methods. It is very important to focus on the types of trades that offer some level of risk protection when you are new to trading.