There are two main factors for choosing a currency pair.
1. The average daily range of PIPS that the pair moves.
2. The clarity of the patterns produced by the pair.
The EUR/USD has always been the pair that is most popular among Forex traders. And yet I never trade that pair primarily because it has a relative small average daily range of movement compared with some others. After closely following all the pairs every day for years, I discovered that most of the pairs are correlated directly or inversely. Almost all the pairs are doing something similar so there is no reason to trade all of them.
It does not really spread the risk to trade several pairs that are all doing the same thing. The GBP/JPY is the king of PIP movement so if you enter a trade on that pair you will get more profit for doing the same work compared with entering a trade on another pair. Many people are afraid of this pair because of the volatility but that is because they do not recognize patterns and entry signals and since it moves large number of PIPS, they are afraid of large losses rather than focusing on the large potential wins.
Clarity of pattern is the other primary factor and some pairs make no sense at all in terms of producing recognizable patterns. Since our trading decisions are based on signals and patterns, it makes sense to first look at the recent history of any pair being considered and see if the pair has a history of producing chaotic or recognizable patterns.
Often the EUR/JPY forms patterns that are more easily recognized than the GBP/JPY. Therefore it is more desirable to trade this pair even though the same movement will often produce more PIPS on the GBP/JPY. Since these two pairs are closely correlated I also often use the EUR/JPY to gain insight into the patterns being formed on the GBP/JPY because when an entry occurs it is likely to form on both pairs.
It is also a good idea to check the current status of the EUR/GBP in order to see which currency is stronger or weaker. This can tell you which of the two pairs, the GBP/JPY or EUR/JPY is likely to be favorable for going long or short. If the EUR/GBP is going up then the EUR is stronger than the GBP and therefore the EUR/JPY is favorable for any long entries while the GBP/JPY will be favorable for the short entries.
Because successful trading depends on the market forming trends, one of the most important insights to experience is that when a pair is correcting or consolidating that means that the trading opportunity has shifted to a different time frame. So the truth is, once you see how to recognize patterns within patterns you will know that the market is always tradable if you know which time frame the trade is producing the ideal formation of a trade entry and exit.
