If you are looking for ways to improve your finances, investing is certainly something worth thinking about. The right kind of investment done well can offer a much better return than your spare money simply sitting in a savings account. One market that many people in the UK are starting to look at now is forex. This is the biggest financial market on the planet and sees trillions traded each day.
Investors here choose currency pairs to trade and try to predict whether the price of the pair will go up or down. If you plan to dip your toe into the forex market, you just need an internet connection and some starting capital. You would also need to sign up with a reputable online broker to trade with. Doing your research here first is key so that the broker you pick is a decent one – this AvaTrade review gives an idea of what to look for.
Of course, choosing which currency pairs to trade is also important. But which are the best for new investors to try?
You will find the US dollar in many FX pairs as it is such a major global currency. When combined with the euro, it is a good place to start for new traders. As the euro is also an important global currency, this pair has good stability and liquidity. This means that you will have no trouble finding trading opportunities but should not get overwhelmed by rampant instability. The bid-ask spread is usually low on this pair, which helps in terms of trading costs.
As mentioned above, the US dollar is a common sight in many FX pairs. Here, it combines with the exotic Japanese yen to form a pair that can give new traders good profits. This is a very liquid currency pair, which is the major reason why it can deliver decent returns in a short time span. The yen tends to move to similar patterns throughout the year, which makes it easier for newer traders to read. This pair is also good to learn about how political news impacts FX trading as the yen is greatly affected by external influences like this.
Although Brexit had made this pair less stable than it once was, it is still a currency to look at for new traders. Now that Brexit is done, many hope that this pair should start to become easier to trade once more moving forward. This pair does not usually see wild price swings, which is good news for less-experienced traders. The trends in this pair are also normally easier to spot and predict, which is a good feature for newer investors.
Trading the right pair is key
Many new FX traders assume that each pair is essentially the same and you can pick any to trade at random. While the basic premise of trading any pair is the same, each will have its own behaviours and foibles. By choosing one that is more suited to beginners and really getting to know it, you will be more likely to succeed.