Find out everything about the major currency pairs in the forex market and how to take advantage of them to trade forex like a pro!

If you want to start trading forex, the first lesson is learning how to trade forex.

This guide will teach you the 10 best forex pairs to trade with, the way they are traded, and how you can profit from them. 

Here are the top 10 currency pairs by trading volume.

How to Trade Forex: Understanding the Basics

Before we get into the two most popular and liquid FX pairs, let’s cover the basics of how to trade forex. 

To trade forex, you buy one currency and, at the same time, sell another.

Currency pairs are quoted as two prices, one for the bid (buy) side and one for the ask (sell) side. 

You make money on the difference in exchange rates between the two currencies.

How to Trade Forex: The Major Pairs

1. How to Trade Forex: EUR/USD (Euro/US Dollar)

The most traded currency pair in the world is the EUR/USD. It is a symbolic pair that represents the euro against the US dollar.

This pair is liquid and has low spreads, making it a very attractive trading instrument. 

When trading this pair, it is vital to follow the economic releases (GDP, unemployment rates, interest rate decisions) of the US vs the Eurozone.

2. How to Trade Forex: USD/JPY (US Dollar/Japanese Yen)

 The USD/JPY pair is popular among traders because the economies of the US and Japan are considered strong. 

The yen is often referred to as a ‘safe-haven’ currency because it has a tendency to strengthen during periods of economic uncertainty.

Traders of this pair will want to pay extra attention to the Bank of Japan’s monetary policy and US economic data.

3. How to Trade Forex: GBP/USD (British Pound/US Dollar)

 The GBP/USD pair, also known as ‘Cable’, is affected by its economic conditions in both the UK and the US. 

Important events to pay attention to include Brexit developments, Bank of England meetings, and US Federal Reserve policies. 

This pair can be more volatile compared to EUR/USD. This pair brings more opportunities with higher risks.

4. How to Trade Forex: AUD/USD (Australian Dollar/US Dollar)

The AUD/USD pair is often driven by commodity prices, particularly those of gold and iron ore, which is one of Australia’s key exports. 

Traders should monitor decisions of the Reserve Bank of Australia’s interest rate, as well as economic data out of the US.

5. How to Trade Forex: USD/CAD (US Dollar/Canadian Dollar)

The USD/CAD pair is highly correlated to oil as Canada is a major oil exporter. When oil prices are rising, the Canadian dollar will typically strengthen versus the US dollar. Traders will want to monitor the oil markets and the Bank of Canada’s monetary policy.

6. How to Trade Forex: USD/CHF (US Dollar/Swiss Franc)

The third and final pair we will cover is the USD/CHF, otherwise known as the Swiss franc. This is another safe-haven currency pair. The franc tends to gain strength when markets get volatile. It is also responsive to the policies of the Swiss National Bank and the release of US economic indicators. 

7. How to Trade Forex: NZD/USD (New Zealand Dollar/US Dollar)

The NZD/USD pair is also driven by commodity prices, like the AUD/USD pair, with agricultural exports being one of New Zealand’s key exports. Traders should be mindful of movements in dairy prices and should also monitor interest rate decisions by the Reserve Bank of New Zealand.

8. How to Trade Forex: EUR/GBP (Euro/British Pound)

In terms of the economic story, the EUR/GBP pair is about the economic relationship between the Eurozone and the UK. All developments regarding Brexit, as well as economic data news from both regions, are important. 

This pair is not as volatile as some others, but there are still a lot of opportunities for profits. 

9. How to Trade Forex: EUR/JPY (Euro/Japanese Yen)

Next, we have the EUR/JPY, the pair responsible for trading the euro against the yen. 

The two currencies are from different areas of the world where the economic drivers are not the same. 

The economic data and the policies of the European Central Bank are very important for trading this pair. It is a good option for traders to diversify their portfolios.

10. How to Trade Forex: GBP/JPY (British Pound/Japanese Yen)

The GBP/JPY pair is one of the most volatile pairs in the forex market. It can give significant profit to an experienced trader. Factors to consider that affect the price movement are the policy statement by the Bank of England, news of Brexit, and economic figures for Japan.

It can present several trading opportunities for the experienced trader but at the same time, it can be risky too.

How to Trade Forex: Key Strategies

Now that you know your FX 10, here are some fundamental strategies for how to trade forex successfully:

 1. Technical Analysis: The use of historical price data to predict future price movements using tools such as moving averages, trend lines, and candlestick patterns.

 2. Fundamental Analysis: This approach looks at economic data, interest rates and geopolitical events to determine how they can affect currency valuations. You need to keep up with the news and reports.

 3. Risk Management It is important to master risk management in forex trading. You can do this by setting stop-loss orders, using a reasonable amount of leverage, and diversifying your trades in order to minimize your losses.

 4. Mood or Sentiment Analysis: Understanding the mood or sentiment of the market can shed light on what might happen to prices in the future (eg, buying or selling frenzies). If you can read the mood of the market, you can anticipate and benefit from future price movements. Sentiment analysis tools such as the Commitment of Traders (COT) report can help you decipher the sentiment of the market.

 5.  Carry Trade: Borrowing in a low-interest-rate currency and lending in a high-interest-rate currency to take advantage of the differential.

How to Trade Forex: Tips for Beginners

Step 1: Demo Account  First of all, when you are new to Forex or any kind of day trading, always start with a demo account. Many brokers provide you with a demo account to get started. Test your strategies and gain an understanding of the market. 

 2. Educate Yourself – A continuous education with books, courses, and online sources about the forex market is essential. Knowledge, they say, is power.

 3. Trading Journal: Keep track of your trades, systems, and results to uncover patterns and become a better trader with time. 

 4. Be Disciplined: Follow your trading plan and avoid emotional trading. It’s about consistency over time.

 5. Leverage Wisely: You can multiply your profits by using leverage, but you can also multiply your losses. Be judicious. 

How to Trade Forex: Final Thoughts

When it comes to learning how to trade forex, knowing which are the top currency pairs is an important piece of the puzzle, but it is far from the whole picture. 

Technical and fundamental analysis, risk management, and education, among other things, must be considered. 

Knowing which currency pairs to trade and using those that you are most interested in and have the best chance of understanding is one thing, but you also need to learn how to interpret them and how best to take advantage of them. 

This means learning how to make the right moves at the right time with the right size and types of trades. Above all, you need to keep yourself well-informed and improve your trading discipline.

Forex trading might be the hottest bet for earning money, but it also carries considerable risks.

 Make sure to always trade with a sense of responsibility, and consult an expert in finance if needed. With enough knowledge, sound strategy, and a lot of luck, you can make great decisions and achieve your trading goals. 

To sum up, learning to trade forex and mastering the top 10 FX pairs can make your journey as a trader successful. If you follow the tips and tricks provided in this guide, you will be able to trade in the forex market with better chances of making a profit.