QOD July 19th
Q: I just opened my first forex account and I’m starting out with a small account during the learning phase. Any advice on which forex pair I should test my strategies with?
A: Great question in that you are implying a risk-based plan during your learning period. Always like to see that. You want a strategy that will give you the biggest potential edge or at minimum, no unnecessary obstacles that will reduce your edge. In forex trading, this means spread risk. Stick to the pairs with the smallest pip spreads and highest liquidity. In both cases, the answer is often contained in the EUR-USD pair. It also provides a level of volatility that is playable without the out of control whipsaws that can occur in other pairs (with exception during news events of course).
If you are purely in learning and testing mode, also consider the USD-JPY during your training. It is a bit volatile of late but these swings act as a good learning environment in simulation or to test out a strategy. Hold on to your seatbelts with this one as with any currency pair and always have your list of domestic and international economic news releases at hand before entering.
