Forex trading in 2023: Which pairs should you trade in?

When forex trading, we are always looking for that golden goose — that magical trade that can give us a huge profit and set us up fantastically for the rest of 2023. A great way to do this is to have a keen understanding of the most popular currency pairs to trade.

We are not saying that these are pairs that you should definitely trade. Instead, we are saying that there are some currencies that have a better track record and simply perform better due to factors like their liquidity and trading volume.

Below, we look at the different factors to consider when choosing currency pairs and give you a list of our favourite choices for 2023:

Factors to consider

Before we jump into the pairs, it’s important to understand the best forex signals to look for when choosing currencies to trade with.

Firstly, liquidity is highly important. Liquidity is the rate at which a currency pair trade can be executed at. Currencies with a higher liquidity have far more buyers and sellers and as a result, your orders are far more likely to be completed. For example, USD is included in virtually all top currency pairs and is highly liquid.

Secondly, volatility is also important. This relates to the rate at which the spread between currency pairs changes. If you want to make a long-term investment, pairs with lower volatility are better, whereas if you want to make big cash quickly, you look for pairs with higher volatility.

Lastly, always look at economic climates and what is going on in the world economy. The GDP of countries, their economic state and issues such as war and civil unrest can drastically alter the spread and volatility of currencies.

These pairs could be great investments in 2023

With some key pointers in mind to look for, let’s get to the meat of the article. Based on volatility and liquidity, we have chosen six of our favourite currency pairs that you could start trading in 2023. Please note that this should not be considered investment advice. We are not guaranteeing success with these currencies and do not accept any liability for our recommendations.

EUR/USD

The EUR/USD pair is often known as the fibre of the forex industry and usually has the highest trading volume and lowest spreads.

You are essentially making profit from two of the largest global economies – the European Union and the United States. Generally, this is a great place to start for beginners.

USD/JPY

The USD/JPY pair is another pair with excellent liquidity and it thrives on the current tense relationship between the US and Asia.

The value of the Japanese yen can fluctuate daily. If you buy and sell with great timing, you can make consistent returns.

GBP/USD

The pound sterling and US dollar pair is known as the cable of the forex industry, and it remains an incredibly popular trading pair. This pairing is more for the risk taker as it can be more volatile, especially due to the current uncertain nature of the UK economy after leaving the EU.

USD/CNY

This pair is made up of the US dollar and Chinese yuan and is a great option as it involves two global superpowers, and arguably the two largest economies in the world. Typically, the price of the yuan is low compared to USD and global tensions mean that volatility can result in decent profits.

USD/CAD

This is a logical trading pair as the two countries are neighbours and share borders and the currencies are tightly interlinked. The Canadian dollar is influenced by external factors too such as the price of oil though, so this does add an additional layer of research that is required to be successful.

AUD/USD

The Aussie trade accounts for approximately 5% of daily forex trades and is another steady earner with excellent volatility. Like the CAD, the AUD price fluctuates depending on the value of commodities such as coal and iron ore as these are Australia’s major exports.

Utilize currency pairs with high liquidity and market volume in 2023

The above currency pairs should put you in a good stead for your investments in 2023, but as with any investment there is always the risk of incurring a loss.

You should never simply rely on the “most popular” currency pairs as the basis for your trading strategies. Instead, you should take a measured approach that considers which are the pairs with the most liquidity and volume, but also consider current economic situations and global events that could push other currencies to the forefront.