Which Currencies Should You Trade?
There are dozens of currency pairs that you can trade. There are 8 major ones, that account for the majority of the activity on the markets. To begin with, you should focus on these. And when you first start, concentrate on one pair. Make it a pair that you know a little bit about. So for example, if you are based in the UK- focus on GBPUSD or EURGBP. You might not think you know much about forex, but if you happen to live in one country and read the newspapers and watch the TV, you will be something of an expert on the market compared to, say, someone who lives in New Zealand.
If you are a Kiwi, you might wanto to focus on AUDNZD or NZDUSD.
Live Currency Pairs: Rates as They Stand This Minute
USD United States $
EUR Euro € (Fiber)
JPY Japanese Yen
GBP British Pound Sterling (Cable)
CHF Swiss Franc (Swissy)
CAD Canadian $ (Loonie)
AUD Australian $ (Aussie)
NZD New Zealand $ (Kiwi)
Currency pairs are formed by two currencies, of course. So you have GBPUSD, EURUSD & USDJPY. You trade the exchange rate between the currencies, betting that it will go up or down. And why is it GBPUSD and not USDGBP? Well, essentially, it doesn´t really matter. The important thing is that everyone speaks the same forex language, so there is a convention that is used across the world. Everyone talks about GBPUSD (a figure higher than 1 for the moment) rather than USDGBP. Because everyone sticks to this rule it avoids confusion.
As we said in Basics 1, the forex market is a bit like the old British Empire- the sun never sets on it. It is open 24 hours a day.
Here are the main open and closing times of the major forex centres (the opening time will generally coincide with a spike in trading volume, so this is handy information to know. Print it out and pin it up on your wall!)
Times if you are based in London
Tokyo Opens: Midnight
Tokyo Closes 09:00
London Opens 08:00
London Closes 17:00
New York Opens: 13:00
New York Closes: 22:00
Times if you are based in New York (EST)
Tokyo Opens: 19:00
Tokyo Closes: 04:00
London Opens: 03:00
London Closes: 12:00
New York Opens 8:00 am
New York Closes 17:00
The Forex market (OTC)
Times if you are based in Barcelona (GMT+1)
Tokyo Opens: 01:00
Tokyo Closes 10:00
London Opens 09:00
London Closes 18:00
New York Opens: 14:00
New York Closes: 23:00
Trade One Currency Pair at a Time
When you start out, focus on one pair. Specialise. Keep up to date with the financial & political news. Once you start gaining a bit of confidence, you can begin to trade more than one pair, but stick to the majors.
Trading multiple pairs
Trading multiple pairs allows you to hedge your risks a bit, and may offer more opportunities to make money if all the action is in one currency. So if it happens to be UK election day, for example, you could trade GBPUSD, EURGBP and GBPJPY.
The more pairs you trade, the more difficult it is to keep up to date with the fundamentals of the market (just because of the volume of news) and the more important to use technical analysis. We would recommend sticking to a maximum of 3 until you really start to get the hang of things.
What’s in A Pair? Forex Educational Video