My first forex trade was EUR/USD. I bought because I heard the euro was "strong." That was the extent of my analysis. I lost $300 in 45 minutes, didn't understand why, and spent the next month reading everything I could find about how currency pairs actually work.
That was almost a decade ago. I've traded forex across all sessions, all pairs, and probably every mistake you can make. Here's what I know now.
What Are Currency Pairs?
Forex trading means buying one currency while simultaneously selling another. Every trade is a pair. EUR/USD means you're buying euros and selling dollars (going long) or selling euros and buying dollars (going short).
Pairs are divided into three categories:
- Major pairs: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD — these involve the US dollar paired with a major economy. They have the tightest spreads, highest liquidity, and are what most traders start with.
- Cross pairs: EUR/GBP, EUR/JPY, GBP/JPY, AUD/NZD — these don't include the US dollar. Spreads are wider, movements can be less predictable, but they offer opportunities when majors are ranging.
- Exotic pairs: USD/TRY, USD/ZAR, USD/THB, EUR/TRY — pairs involving emerging market currencies. Spreads are wide, liquidity is thin, and slippage is common. Not for beginners.
The Major Pairs: What You Need to Know
Each major pair has a personality:
- EUR/USD: The most liquid, tightest spreads, most "textbook" pair. Moves are clean, technicals work well. This is where I tell beginners to start.
- GBP/USD (Cable): More volatile than EUR/USD, wider stops needed. Sensitive to UK economic data and political news. Brexits, budget announcements, etc. can cause huge moves.
- USD/JPY: Tight correlation with US Treasury yields. If yields go up, USD/JPY typically goes up. Moves are cleaner than GBP/USD. Good for breakout strategies.
- AUD/USD: Commodity currency — sensitive to gold, iron ore, Chinese economic data. When China is buying, AUD is strong. When risk appetite is on, AUD rallies.
- USD/CAD: Oil currency. When oil prices rise, CAD strengthens and USD/CAD falls (most of the time). Watch WTI crude if you trade this pair.
- USD/CHF: Safe haven. When equities crash, CHF strengthens. Historically seen as a "risk-off" pair.
Trading Sessions
Forex runs 24/5. Here's what each session means for pairs:
- Tokyo session (midnight-9am GMT): JPY pairs most active. Range-bound trading, lower volatility. Good for traders who prefer slow, predictable moves.
- London session (8am-5pm GMT): 35% of all forex volume happens here. EUR and GBP pairs most active. Highest volatility, best trading opportunities.
- New York session (1pm-10pm GMT): USD pairs active. Overlap with London (1pm-5pm GMT) is the sweet spot — highest liquidity, tightest spreads.
- Asia-Pacific session: AUD, NZD, JPY pairs active during their respective business hours.
Spreads and Costs
Let me give you real numbers from my own trading. On EBC's Standard account:
- EUR/USD: 0.0 pips (raw spread, commission included) — typically 0.0-0.2 pips during London/NY overlap
- USD/JPY: Low as 0.0 pips
- GBP/USD: 0.3-0.6 pips during liquid hours
- AUD/USD: 0.2-0.5 pips
On their PRO account (raw spreads + $6 commission per round lot), the spreads are even tighter. A 0.0 pip spread on EUR/USD with $6/lot commission effectively costs $6 per round turn. Industry average is around $7-10 for equivalent execution quality.
What I Actually Do Now
I trade mostly GBP/USD and XAUUSD. EUR/USD for range setups. Occasionally AUD/USD when gold moves are correlated. I avoid exotic pairs — the spreads eat your profits before you even get in.
For beginners, this is the path I recommend:
- Start with a demo account for at least 3 months. Trade EUR/USD only.
- Learn to read each session's behavior. Take notes on when volatility picks up.
- Add one major pair at a time. Understand each pair's "personality."
- Only move to cross pairs when you're consistently profitable on majors.
- Never trade exotics until you have a proven edge.
Forex isn't complicated — it's just relentless. The market never stops moving, and it doesn't care about your analysis. What separates profitable traders from everyone else isn't a secret indicator or a hidden strategy. It's consistency, risk management, and understanding that the best trade isn't always the most active one.