If you are interested in this topic “how many pairs should i trade forex?“, stay till the end.
The world of foreign exchange trading offers a vast array of currency pairs to choose from, each has a unique characteristic with the market dynamics.
While this variety provides flexibility and potential opportunities, it also poses a challenge for some traders: how many currency pairs should one trade to maximize success?
What are forex pairs in the market?
Have you ever heard of forex pairs?
In simple terms, a forex pair represents the “exchange rate between two currencies.” It’s like comparing the value of one country’s money to another country’s money. Just that simple!
For example, the EUR/USD pair represents the exchange rate between the euro (EUR) and the U.S. dollar (USD). If the EUR/USD trades at 1.25, one euro is worth 1.25 U.S. dollars.
How Many Forex Pairs Should I Trade?
To begin with this topic, you have to know that Forex pairs are listed in two parts: the base currency and the quote currency:
- The base currency is always the first currency listed, and it is the currency you are buying.
- The quote currency is the second currency listed and the currency you are selling.
When you buy a forex pair, you bet the base currency will strengthen against the quote currency. If you are right, you will make a profit, but if you are wrong, you will lose it.
The Power of Focus:
Contrary to popular belief, focusing on fewer currency pairs can enhance trading success.
You can identify and capitalize on market trends more effectively by dedicating time and effort to comprehend a select few’s intricacies.
To give you the exact number of pairs you should trade forex, the median is 5 to 10. Not more and not less.
In this case, you won’t be overwhelmed by the end of the month. If you are a beginner trader, you already know that keeping track of many pairs can be difficult.
But if you try to focus on just one pair, you will better understand how that pair moves and what factors were affected.
While Trading Pairs in Forex, Strike a Balance Between Variety & Depth
With over 100 currency pairs available, the temptation to spread your attention across them can be overwhelming.
However, if you keep the balance, it often leads to analysis paralysis, hindering your ability to develop deep market understanding and execute trades with confidence.
The Professional’s Point of View: How Many Forex Pairs Should be Traded?
The ideal number of trading pairs in forex differs based on individuals’ experience.
The best number of currency pairs for a professional trader depends on their risk tolerance and trading style.
However, in general, professional traders mostly trade fewer pairs than beginners. This is because they have a deeper understanding of the market and can better manage their risk when trading fewer pairs.
Look at the table below:
| Expertise Level for trade | The number of trade pairs |
| Beginning Professional Traders | 5 to 10 pairs |
| Experienced Professional Traders | 10 to 20 pairs |
| Full-Time Professional Traders | 20 to 30 pairs |
Now, you will gain a general overview of how many pairs each trader tends to trade on forex.
Now let’s learn more about the forex pairs to trade; which ones are the most recommended?
What Are the Safest Forex Pairs to Trade?
Before providing the safest forex pairs to trade, it is worth mentioning that these are just guidelines, and the optimal number of pairs or the most recommended pairs for each trader will vary.
The most recommended forex pairs to trade
- EURUSD: Eurozone / United States
- USDJPY: United States / Japan
- GBPUSD: United Kingdom / United States
- AUDUSD: Australia / United States
- GBPJPY: United Kingdom / Japan
- EURJPY: Eurozone / Japan
- AUDJPY: Australia / Japan
- NZD/USD: New Zealand / United States
- NZD/JPY: New Zealand / Japan
Big price changes mean more trading chances but also more risks.
Currency pair price fluctuations over a period define market volatility. Higher volatility signifies more trading opportunities but elevates risk.
Traders with a higher risk appetite gravitate towards volatile pairs, while those seeking stability opt for less volatile ones.
Economic news releases, geopolitical events, and central bank announcements influence market volatility.
Which Forex Pairs Are Best for Beginners?
The best pair for beginners to trade on the forex market is the EUR/USD currency pair, as it is less volatile than some other pairs, which makes it highly liquid and easier to trade.
The other ones are listed in order:
- GBP/USD: Great British pound & United States dollar
- USD/CHF: United States dollar & Swiss franc
- AUD/USD: Australian dollar & United States dollar
Do you know what is the most challenging currency pair to trade?
Exotic currency pairs are the most difficult to trade. They are highly volatile, have very low liquidity, and have the widest spreads. These factors make them extremely difficult to predict and trade profitably.
These pairs include:
- AUD/NOK: Australia and Norway
- AUD/PLN: Australia and Poland
- AUD/SEK: Australia and Sweden
- AUD/SGD: Australia and Singapore
- CAD/SGD: Canada and Singapore
- CHF/SGD: Switzerland and Singapore
So, if you are a beginner or do not have the time of that expertise, it is important to know all these difficult currency pairs and avoid them. Choosing the right currency pairs is important for your forex trading success.
If you want some guidance on choosing the most suitable currency pairs, pay attention to the tricks below:
- Consider your trading style and risk tolerance.
- Choose liquid pairs for smooth order execution.
- Understand correlation to manage risk.
- Study economic factors like interest rates and central bank policies.
- Monitor news and events.
- Start small and gradually expand your pairs.
- Do a thorough analysis before trading a pair.
- Use stop-loss orders and profit targets.
Our related post on “Can Forex Trading Make You Rich?” can offer additional insight on this topic.
Conclusion Remarks
Some traders may be able to trade successfully with more pairs, while others may find that they are better off sticking to a smaller number. You have to know that it is all about Learning and improving constantly.
Navigating the vast array of currency pairs in the forex market can be a frightening task, not only for new traders but also for the more experienced ones.
Do you trade with safety? By understanding the factors that influence pair selection, you can make informed decisions about which pairs to trade to maximize your chances of success.
Please add your opinion on the “How Many Pairs Should I Trade Forex? A Comprehensive Guide on Forex Pair Selection” topic and let us know how many forex pairs you are you are trading.
Please also mention which forex pairs are best for you. Come up with some reasons to convince us!