Forex trading is a global trading market with a huge population of traders trading from all over the world. You can trade forex currency pairs through CFD betting or spread betting. Both of these methods are quite popular these days. Traders can only trade a percentage on the full trade value. Therefore, all the traders have equal chances of winning and losing the trade. Forex trading allows traders to invest their money in a variety of currency trading pairs. This results in maximizing their profits and reduces the risk of losses.
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Top Currency Trading Pairs
Here, we will highlight some of the top currency trading pairs you should trade in 2021 because of their popularity and performance:
USD to EUR is a well-known currency pair around the world. The term USD/EUR is short for conversion of US dollars into Euros. Around 19 from the 28 countries in the European Union recognize Euro as their official currency. Therefore, Euro is quite stable. Countries such as France, Germany, Spain, Latvia, and other west European countries use Euro.
Political movements and other activities affecting both or any one of these currencies have a great impact on the USD/EUR pair. For instance, if the European Central Bank interferes in the market for strengthening the Euro, there will be a fluctuation in the cross between the USD and the EUR.
The official currency of Japan is Yen or JPY. During World War II, the value of the yen dropped down by a massive amount. However, its value is normalizing after the oil crisis in 1973.
The yen works well by holding the reserve currency with the USD, the GBP, and the Euro. Because of the Japanese government’s policy, professional traders consider the yen as a currency with floating exchange rate. These policies by the government are providing stability to the yen. The Japanese currency experiences fluctuations every day. To control the exchange rates, the central bank of Japan buys and sells the currency frequently.
There is a high surcharge by the government to keep the prices of yen low. This enables the government to create a competitive market for export industry. If you are dealing in USD/JPY, you should closely monitor the daily fluctuation in the Japanese markets.
Canada is in the North of America and an important trading partner because of the sharing borders. The values of USD and the CAD interlinks because of the close relations. The Canadian currency has a strong connection with commodity prices. For example, oil prices have a huge impact on the currency. This influence is the result of the Canadian economy, as it depends on the prices of oil. In 2016, the Canadian dollar suffered because of the massive drop in oil prices. The best technique for understating the USD/CAD exchange is by monitoring the oil prices.
The official currency of the UK is the British pound sterling. England, Wales, and Scotland use this currency for trading and business. Even though the United Kingdom was a part of the EU until 2016, they never switched to Euro. The value of GBP is just behind the US Dollars and the EURO, making it the third most traded currency. After the Great Recession from 2007 to 2008, the price of GBP dropped significantly and affected the currency value.
Most traders find forex trading an interesting way to make money. However, if you are not willing to invest your time in the trading industry, you might not be able to earn maximum profits. You may hear many traders suggest that currency pairs with lower spreads are better. You can save a lot by picking the pairs with a lower spread. According to many other traders, choosing the active currency trading pairs will yield maximum profits during the suitable hours of trading operations. All these trading techniques are okay to try. There are no fixed rules to trade with forex currencies. It is important to understand each pair with their own personality. This will result in better decisions and trading successfully.