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Saturday, June 17, 2017

Which Currency Pair Should I Choose?

Sometimes this question is raised not only by rookies, but those intermediate or even high experienced traders would raise the same question.

When it comes to selecting some options, you will always look at the advantage and disadvantage of each option. In this case, what would you like to see are what is the reward, and what is the risk of each currency pair.

What Determines the Rewards?

When one currency pair is following its trend and supported by several technical indicators then it might be a very good chance for a trader to enter the market. They will look at support and resistance levels to get an idea at what point will price be overbought or oversold. That would be the point for traders to exit the market and take profit.

What Determines the Risk?

Volatility might be considered to determine how big the risk is going to be to enter the market. High volatile might promise you huge profit but at the same time, it also has the potential of losing your money in a glimpse.

A wise forex trader will consider this point before entering the market.

The trend is (supposed to be) your friend… If you open a position in a different direction from the market trend that means you are swimming against the wave and that would be quite risky.

Based on the description above, a trader should be able to see what is the reward and risk of each currency pair and will enter the market accordingly.