It appears that the majority of Forex newbies do not see anything special about trading currency pairs. They underestimate one of the most powerful trading instruments ever. Sometimes, things may get even worse. A beginner starts to trade ANY currency pair without diving deeper into financial analysis. The asset is truly the best one to get started. But the key to success is to find your perfect match!
The main question here is "what is the best currency to trade for beginners". Is it the iconic EUR/USD or a bit more exotic GBP/JPY? Selecting the right pair is not just pointing at the first one just because you like the way it sounds. When choosing the best currency to trade for beginners, you need to focus on fundamental features such as predictability, volatility, and other crucial aspects.
So, today we are going to find out how to find the best currency pair to trade as well as the latest Forex trends that dominate in the market in 2020. But first… Do you really know what the currency pair is?
What Is a Currency Pair?
The term refers to the value of one particular currency unit against another. When you trade this pair, you buy one currency for another intending to pocket the difference. In other words, you try to compare the value difference between the "quote" and the "base" currency:
- The Quote Currency – it is the currency item that a trader is going to sell.
- The Base Currency – it is a currency item a trader is eager to buy.
So, the trading process involves two major phases: buying and selling. They take place simultaneously although the currency pair itself is considered as a separate trading instrument like gold, crude oil or stocks. There is a bid price that specifies the amount of quote currency a trader needs to buy the required amount of base currency.
Nothing difficult here. However, a few beginners are able to pick the best match right from the start. Why is it actually important to pick the right pair? Why can't you just select the first one available and start trading? Find the answers in the next section.