I’m currently seeking answers to the best currency pairs to trade.
You can thin the field down a bit without any in-depth knowledge of the price behaviour of the various pairs.
There are 28 leading pairs formed from the 8 major currencies. Pairs including the Australasian currencies AUD and NZD usually have the widest spreads and highest margin requirements, so these are more expensive to trade. Cutting them out leaves 15 pairs.
Maybe your strategy requires high volatility. Its hard to make much profit of price doesn’t move much per day. Some AUD or NZD pairs are highly volatile but pairs from the other 15 with the highest long-term volatility are those with JPY as the counter (second) currency - CAD/JPY, CHF/JPY, EUR/JPY and GBP/JPY - but not USD/JPY. Pairs from the remaining 11 with the lowest long-term volatility are the 3 EUR pairs, GBP/CAD and USD/CAD.
Many brokers sub-divide the pairs into Major and Minor. Spreads are narrowest and margin requirements lowest for the Majors. The 8 Major pairs are -
EUR/CHF
EUR/GBP
EUR/USD
GBP/JPY
GBP/USD
USD/CAD
USD/CHF
USD/JPY
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Based on what?
Central banks are close to completing their tightening cycles, hence markets will now start to gradually price in rate cuts. Gold price is primarily a function of real interest rates and considering dovish expectations that will gradually arise the path higher will likely be opened. Hence I expect modest to major gold revaluation this year.
I did a study of pip value vs volatility and came up with gold.
Then I did a chart comparison of daily moves with Tradingingview charts to see the relationship of daily moves between all pairs.
Again, Gold won the day. I was wondering why…after a little more study… ahhh ha Gold is the foundation of the US dollar.
I would trade Gold, then US30index, then GBP/USD based on the research.
All the other pairs are based on usd crosses and have lower volatility.
Example:
Yen pairs are valued $7.5 per pip 1 lot .75 mini
Given a daily volatility of 200 your value would be $1,500 or $150
GBP/USD pairs are valued at $1.00 per pip
Given a daily volatility of 200 your pip value would be $2000, or $200.
Aud crosses are at $6.9 right now.
The data says gold, US30 index or GBP/USD based on daily volatility studies vs pip value.
Hope everyone has a great 2023 trading year.
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