Forex Traders sometime ask me suggestions on which Forex currency pairs should they typically trade.

If you are ever had same confusion, then it typically implies few things -

1.You don't have any particular Trading plan in place - The reason I saw this is because If you are not sure of pairs to trade, then it means that you are not referring to a particular trading strategy. Each good trading system highlights which currency pair it works best with.

2. The trader doesn't has enough insight in each currency pair - See, if you are aware of what are the positives and limitations of each currency pair, then the decision will become much easier. For example, we know that USD/CAD is highly influenced by Oil prices. Similarly, USD/CHF has negative correlation with EUR/USD. Another one, EUR/GBP is less volatile so it moves slow, but each pip is worth $1.5

The selection of currency pair to trade should be based on -

1. The volatility of the currency pair - Does it move much? Does it move enough to follow technical patterns?

2. What is the spread - If the spread is large like 10-12 pips, then the currency pair is not suitable for day trading.

3. Is the currency pair technicaly moved or is it highly driven by economics - USD/JPY for example is highly economically influenced and doesn't respond to technical analysis that well as compared to other currency pairs

The above factors will help you decide on currency pairs that you should trade.

Now, if you ask me one or two currency pairs that you should always consider, I would recommend you - EUR/USD and GBP/USD.

Why? Because they meet all the above requirements. They are highly liquid, they have very tight spread like 2-4 pips across more or less all the brokers and they respond very well to technical levels.

So, if you are just starting in forex trading, start with these currency pairs.