Which Forex Pairs to Trade – Day Trading and Swing Trading

Which pairs you opt to day trade or swing trade will depend on your trading style. We’ll talk a bit about that, and then discuss which forex pairs to trade. 

Main Takeaway Points

  • 1-minute chart day traders, focus on trading one pair well, like the EURUSD. If it is really quiet for an extended period, consider trading the GBPUSD, but only trade one pair at a time (unless you have automated strategies that don’t require a lot of individualized attention).
  • Day traders trading 5-minute or higher charts, or that use partially or fully automated strategies, trading more than one pair is acceptable.
  • Swing traders, consider looking through multiple pairs. Each trade lasts longer, so there is lots of time to look through charts and find other trading opportunities. Pairs to consider are laid out in the chart below.
  • There is no reason to overwhelm yourself. It is better to trade really well on the trades taken, than to take too many trades or try to analyze too much and trade poorly.
  • Whenever trading more than one pair at once, be aware of correlation! Highly correlated trades increase risk, while inversely correlated trades may reduce profit potential.

Which Forex Pairs to Trade and Trading Style

The less time a trade lasts, the more attention that strategy requires. A day trade that lasts 3 or 4 minutes requires steady focus. That trade will be exited and there may be another opportunity, or possibly the exit requires a manual action on the part of the trader.

If trades last a few days, there isn’t a lot to do while that trade is happening. The trader may look for more trades, but this may only take 20 minutes a day, and then the work is mostly done on that trade for the next several hours or days.

Next, we need to consider if the trader actively manages the positions, or if they set stop losses and profits targets and then leaves the trade alone. Actively managing a trade—determining when to exit in real-time—takes a lot more focus than setting a stop loss and profit target and walking away.

All these things can be boiled down to a few guidelines:

  • Shorter time frames and active management require more focus. This typically means the trader is better off focusing on one, and no more than several, currency pairs. Due to the short time frame of trades, these pairs should be enough to provide lots of trading opportunities.
  • Longer time frames, and not a lot of active management, means more currency pairs can be traded, and may be required in order to find enough trading opportunities.

These are not hard and fast rules, but just some guidelines to consider.

Which Pairs to Day Trade and Actively Manage

When day trading a 1-minute chart, focus on trading one pair well. There are enough opportunities in a few-hour period to make money. Trying to trade more than one pair will likely spread our focus too thin, and we may end up missing some trades as we try to jump back and forth between multiple charts. 

For day trading, I recommend trading the EURUSD. It is the most heavily traded currency pair in the world and typically has the lowest spread (a trading cost). Occasionally the EURUSD will be moving very little, not providing a lot of opportunities. The GBPUSD usually moves a little more than the EURUSD, so in such cases, the GBPUSD could be day traded instead of the EURUSD.

Day traders using a 5-, 10-, or 15-minute chart, if you are conformable and feel you have enough time to monitor multiple charts and trades, that should be fine. Just don’t overwhelm yourself. The same goes for day traders with partially or fully automated strategies. Trade more pairs, if desired, since the automation means there are fewer tasks you need to manage.

For swing traders that actively manage trades, it is better to trade those positions well. Maintain focus rather than try to juggle too much at the same time. Trade any pairs from the chart below, but don’t overextend yourself by trying to trade too many, or even looking at too many. It’s best to focus on a few pairs from the first column

Ideally, if trading multiple pairs at the same time, those positions should uncorrelated.

Which Pairs to Swing Trade or When Trades Require Little Attention

With swing trading, typically we can look through more charts to find trading opportunities. Trades based on hourly, 4-hour, or daily charts don’t need our attention every second. The charts aren’t changing much from minute-minute, so we can set our trades and usually leave them for hours at a time. This allows us to maintain focus when we need it, even when analyzing multiple pairs or managing multiple positions.

If new to trading, start by looking through the currency pairs in the first column of the list below. These are commonly traded pairs involving major global currencies. They will provide lots of opportunities. 

If you have the time, and you are trading the pairs in the first column well and according to plan, consider looking through the second column. The second column pairs are still composed of major global currencies. Only add in more currencies if you are profitable trading the first column. If you can’t trade a few currencies well, adding in more likely won’t help.

More experienced traders, especially with systematic strategies, may want to take as many trades as they can find. They are comfortable managing multiple positions and will typically have stop-loss orders and profit targets placed so they don’t need to micro-manage each position. These traders could look for trades in the third column as well.

The third column has pairs that include non-major currencies. These pairs tend to be more thinly traded and thus tend to have larger spreads. They may also have pip values that are very different than what we typically see in columns one and two. Therefore, only add these pairs if you can comfortably adjust position size based on varying pip values, spreads, and volatility.

Ideally, if trading multiple pairs at the same time, those positions should uncorrelated.

Quality over Quantity

We can run into traps no matter what we do. If we only look at one chart, or a few, but we don’t see a trading opportunity, we may convince ourselves to take a trade anyway. We tell ourselves a low-quality trade still has a chance of boosting our account value. Maybe a few times we get lucky, but over many poor quality trades we lose. 

Similarly, looking through too many charts can make us feel that there are trades in all them of, instead of comparing the charts to see which one or two offers the best opportunity. 

Or possibly, looking through too many charts freezes us! There are so many options that we can’t decide.

So there is no perfect answer on which pairs to trade. Our trading styles and personalities can complicate things. 

The ultimate goal is to be honest with ourselves, and no matter what, put ourselves in the best position to take quality trades. For some people that will mean limiting the number of pairs they look at. For others, it will mean looking at lots of pairs.

Consider your trading style, the length of your trades, how much time you need to put into each trade. Then, during a weekend when there are no trades to distract you, come up with a plan of action that works best for YOU. 

Write down which pairs you are allowed to trade in your trading plan—a written document that outlines how you trade.

By Cory Mitchell, CMT @corymitc

Disclaimer: Nothing in this article is personal investment advice, or advice to buy or sell anything. Trading is risky and can result in substantial losses, even more than deposited if using leverage.

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