Generally speaking you should trade one of the major currency pairs, you should do it at the time that other traders are trading that pair and you should not spread yourself too thin by trading more than one or two currency pairs.
The major currency pairs are the ones that are traded the most. You will have the most action on these pairs which gives you the potential to make the most money. Please note that forex is extremely risky and you should not invest more than you can afford to lose. It is not like the stock market. You will not own the currency outright unless you have a lot of money and you can be sold out of the market by your broker with no prior warning if your currency pair moves in the wrong direction.
The majors are: EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, USD/CAD and NZD /USD.
The Euro to the American Dollar is the most popularly trading and you will be able to save money because your spread will be lower.
Although there are many other currency pairs available, I would not advise trading them because they will cost more money to trade than one of the majors and they are more volatile.
To be the most successful trader you will need to know everything that you can about the fundamentals of the currency pair you choose to trade and you will need to study the charts of the pair for technical readings. This in itself is a lot of work and that is why I advise people to research only one or at the most two currency pairs so that you are the most familiar with the pair that you are trading.
EUR/USD The Euro to the American Dollar
This currency pair is called “the euro” or “fiber”. It is the most commonly traded currency pair. When you “buy” the euro, you are essentially buying the euro and selling the American dollar at the same time. You are essentially helping the euro to go up and the dollar to go down.
When you sell the euro, you are doing the opposite. Essentially pushing the value of the euro down and pushing the value of the dollar up.
This is an excellent currency to trade because it trends in one direction for long periods of time before having a reversal.
The best time to trade the euro is during the Asian session which is 7pm EST to 4am EST or more specifically the time when the European session and the Asian session overlap which is about 2am EST to 4am EST.
The USD/JPY is probably the second best currency to trade after the EUR/USD in my opinion. When it starts to trend in one direction, it really moves, but other times it stays stagnant. The spreads are pretty low, but not quite as low as the euro.
When you buy the USD/JPY, you are buying the American dollar and selling the Japanese yen simultaneously. Think of it as pushing the dollar up and pushing the yen down. Conversely, when you sell the USD/JPY, otherwise known as “the yen”, you are pushing the dollar down and the yen up.
The best time to trade the yen is in the Asian session which is 7pm EST to 4am EST, Sunday night to Friday morning each week.
The GBP/USD is the British pound to the American dollar. It is otherwise known as “the pound”, “the sterling” or “the cable” around the forex market. It is definitely one of the top three currencies to trade.
I personally do not like to trade it because it costs more than the yen or the kiwi, but it does make good steady movements. Even though the forex market can never be trusted to make a profit, if you plan your trade and trade your plan, you will have a better chance.
When you buy the pound, you are buying the pound and selling the American dollar at the same time. When you sell the pound, you are selling the pound and buying the American dollar at the same time.
The best time to trade this currency pair is before and during the Asian session which runs between 7pm EST and 4am EST.
The AUD/USD is the Australian dollar to the American dollar. There is a lot of movement in the Australian dollar, so this is a good currency pair to trade.
When you buy “the aussie” as it is known, you are essentially pushing up the Australian dollar and pushing down the American dollar at the same time. When you sell the aussie, you are selling the Australian dollar and buying the American dollar at the same time.
The best time to trade the aussie is in the European session from 2am EST to 12 Noon EST.
The USD/CHF is the American dollar to the Swiss franc. It is known as “the swissy”. It is in the majors, but not one of the top three. When you purchase or buy this currency, you are buying the American dollar and selling the Swiss franc at the same time. When you sell the USD/CHF, you are selling the American dollar and buying the Swiss franc at the same time.
The best time to trade the swissy is in the European session 2am EST to 12pm EST and the U.S. session 8 am EST and 5pm EST or the overlap between the two between 8am EST and 12 noon EST.
This is the American dollar to the Canadian dollar. Otherwise known as the loonie which I feel is perfectly fitting because this is one crazy currency. I personally do not like to trade it. It moves to slowly for me. If you have the time to hang in there, it does trend in the same direction for long periods of time but painfully slowly at times.
When you buy the USD/CAD you are buying the American dollar and selling the Canadian dollar simultaneously. If you sell the USD/CAD you are selling the American dollar and buying the Canadian dollar.
The best time to trade the loonie is either in the European session from 2am EST to 12pm EST or the US trading session from 8am EST to 5pm EST or the overlap of both sessions between 8am EST to 12pm EST.
The NZD/USD may be on the bottom of this list, but it is still on the list. Some people do not consider it to be a major currency pair, but I do and I love it. I guess I love it because I consistently make money from this pair.
It is called “the kiwi” in the currency market. When you buy it, you are pushing the New Zealand dollar up and the American dollar down simultaneously. Conversely when you sell it, you are pushing the New Zealand dollar down and the American dollar up simultaneously.
I prefer to trade this currency between 3am EST and 12 Noon EST.