Just what are the best currencies for swing trading? The FOREX market has a vast number of currency pairs that a trader could trade. Some of these currency pairs are more main stream like the EUR/USD and others are so called exotics like the GBP/JPY to name just a few. With so many currency pairs available it can be difficult for a trader to know which one they should trade. Swing trading is based on the principal of taking chunks or slices out of the market as price moves up and down throughout the market. If you are looking for the best FOREX currency pair or pairs to trade then you should keep in mind that swing trading works best on markets that trend and are not too volatile. This isn't to say you can't swing trade volatile markets, but for anyone who is just starting out it would be advised to stick to a currency pair which satisfies these two conditions.
The first thing you should look for when searching for a currency pair to trade is that it is not too volatile. Volatility, for some traders, is seen as a good thing. This is because some traders believe that higher volatility implies more market movement and as a result a trader can earn more money per trade thanks to how far and fast price moves. This does hold some truth. Currency pairs like GBP/JPY do have a high degree of volatility and a trader can make more per trade thanks to how fast and rapid price can move. However, volatility also increases the level or degree of risk you are placing yourself at. Too much volatility makes it difficult for unseasoned traders to have enough time to correctly evaluate and plan a trade. Price can move so fast and hard that one single trade can turn out to be a massive loser. Volatility is a double sided coin. While you may earn more per trade, you also stand to lose more per trade if you make a bad decision. For this reason it is strongly recommended that new traders avoid any currency pairs like the GBP/JPY which are extremely volatile and seem to move up and down throughout the market for almost no apparent reason.
The second thing you should look for in a currency pair is the level of trendiness. Swing traders need a predominant trend for them to be able to make a profit. Without a trend or price moving up and down for extended periods of time it makes it extremely difficult for a swing trader to place trades. Swing traders need this up and down or zig zag movement of price where price moves up and down as it continue in the direction of the major trend. Many currency pairs move sideways and do not trend much. Some currency pairs trend but are far too volatile and there is no time for a swing trader to open a trade.
If you are looking for the best currency pairs to swing trade, be sure that you always keep in mind that swing trading requires a currency pair that is not too volatile and also has a tendency to trend. Trading a currency pair that satisfies these two conditions will greatly improve your swing trading success.
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