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Top 10 Forex Pairs to Trade with Maximum Leverage

August 19, 2019 by

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Forex assets are vulnerable to an array of elements which impact their levels of volatility, and therefore many traders center their strategies around the currency pairs which are mostly likely to produce strong price trends. It will be these same assets which provide traders with optimal opportunities for stretching their trading account funds using leverage. Here, we’ll talk about the ten best currency pairs for trading with the maximum leverage allowed. Note, however, that this type of trading plan will only work when trading with a broker such as EagleFX, which provides a leverage ratio of up to 1:500 to their clients.

EagleFX - Top 10 currency pairs for high leverage trading

Volatility within the FX market is typically assessed using the typical deviation of a currency. This provides traders with a realistic expectation of how far the value of a currency can shift from its current price over a specific period of time. Typically, the higher the level of asset volatility, the higher the level of risk, but keep in mind that volatility also equates to movement and that you will want the price of an asset to be in motion if you’re going to spot clear opportunities for market entry.

Different currency pairs will have different levels of volatility. The major currency pairs tend to be more stable in price than the currency pairs which are linked to emerging market currency pairs. Generally, the more liquid that a currency pair is, the less volatile it will be. Many traders delight in the higher prospective gains that come with trading volatile underlying assets, and prospective gains can be greatly increased when leverage is used to give a boost to the initial investment amount. The maximum leverage ratio does vary from broker to broker, so if trading with leverage is part of your general profit plan, do consider opening an account with a broker such as the aforementioned EagleFX.

So, what are the top ten currency pairs to trade with high leverage? Here they are, in no particular order:

  • AUD/JPY
  • USD/ZAR
  • NZD/JPY
  • USD/KRW
  • AUD/USD
  • USD/BRL
  • CAD/JPY
  • USD/TRY
  • GBP/AUD
  • USD/HUF

If you’ve been trading forex for any length of time, then you likely noticed that the list is not comprised solely of major pairs. There are also a few pairs which involve emerging market currencies. Emerging market currencies pairs have a tendency to be extremely volatile because of their lower liquidity levels. This is also because of the inherent risk that stems from emerging market economies. When moving about drastically, emerging market currency values have been known to rise or fall by 25% or more over the period of a single month.

The Truth About Leverage

While some only associate it with higher levels of risk, leverage is in fact a very effective utilization of trading capital, as it allows the trader to enter into larger positions while using less trading capital. Keep in mind that leverage does not change the prospective profit or loss amount of a trade. Instead, it decreases the total amount of trading funds that have to be used. In doing this, leverage thus frees up trading capital and makes it available for other trades. For instance, say that you wished to acquire a thousand shares of XYZ stock at $20 per share and when using leverage, the purchase would require only $5,000 of your total trading capital. This would leave the remaining $15,000 in funds open and available for any additional trades.

What many fail to realize is the more leverage that is available to you, the better the position that you will be in to maximize your earnings. Professional traders will choose a broker that provides them with higher leverage, such as EagleFX, than a broker that offers lower leverage levels each and every time. In telling novice traders that they should avoid trading forex using leverage is essentially the same as telling them to trade like a beginner rather than a professional. Many professional traders always opt to use the highest leverage available and would never enter into a trade without making use of leverage. To put it simply, professional traders value leverage greatly, and they are correct in doing so.

How to Trade the Top 10 Pairs with Leverage

First and foremost, always take the current level of volatility into account, along with any prospective upcoming changes. Your chosen trade sizes should account for just how volatile the pair is at the time. If you’re risk averse and want to enter into a smaller position during times of increased volatility, do what you feel most comfortable in doing. When using leverage, you’ll be able to expand your trading scope, and this is of course still possible when taking smaller trades. When trading on the top ten currency pairs listed above, start by sorting them according to their current levels of volatility. This will provide you with a clearer picture of exactly which pairs you want to trade with during any given market session.

The currencies with high volatility on your list will usually move more pips over a period of time than those with lower volatility. This contributes to an increase in risk when trading when trading highly volatile currency pairs but using leverage and a money management plan will help. During periods of high volatility, currency pairs are also more prone to slippage. Are you worried now? Well, here comes the good news.  High-volatility currency pairs making larger moves, and if you’ve done your homework, you’ll be prepared to profit greatly from these larger price movements. To help you with the homework (analysis) task, let’s look at a few ways to accurately measure volatility levels.

To identify measure volatility correctly, you’ll need to use one or more of the following:

  • Average True Range
  • Donchian Channels
  • Moving Averages

The Average True Range (ATR) index is similar to Bollinger Bands. ATR measures volatility levels over a specific period of time. The true range analyzes the following, searching for the greatest overall value:

  • Current high level minus the current low.
  • Current high level minus the previous closing price.
  • Current low level minus the previous closing price.

Donchian Channels plot two lines on an asset price chart in order to provide a volatility reading:

  • The highest high point over a set period.
  • The lowest low point over a set period.

The time period can be selected and set within the MetaTrader 4 platform, which is provided by EagleFX. The platform also comes with a large variety of additional tools and indicators that can be used to quickly and easily analyze price movement over many different periods of time. Although the Donchian Channel is quite well-known, it does not come as one of the standard indicators within MetaTrader 4. There is no need for concern though, as it can be downloaded and added to the platform as a custom indicator.

To add it to your platform, first create an account with EagleFX, make a deposit, and then open a trading account. You will then be able to access your specific MT4 account within the platform and can follow these steps to add the indicator:

Select ‘File’

  1. Click on ‘Open Data Folder’
  2. Click to open the ‘MQL4’ folder
  3. Click to open the ‘Indicators’ folder
  4. Paste the downloaded Donchian Channels indicator file into the folder
  5. Restart MT4 and the added indicator will then be available

Moving averages are used regularly in forex trading, particularly over 10, 50, 100, and 200 periods. Moving averages are used mainly as trend indicators but are also used to indicate support and resistance levels. The most common used MAs are the simple moving average (SMA), which provides the average rate over a time period, and the exponential moving average (EMA), which places more focus and importance on recent prices.

Deciding Which FX Pair to Focus On

Should you select one of the currency pairs mentioned here and start completely analysis at random? You could, but it is much easier to look to market news as a tool for sorting and refining your top ten list. Download, print, or save any reliable economic calendar and refer to it each day to see where the best opportunities are most likely to present themselves. Forex news, analysis, forecasts and more can help you to pinpoint opportunities before you even load the first chart or indicator.

While the top ten currency pairs listed here will provide a plethora of profit opportunities, they are certainly not the only underlying assets that can be traded on using leverage. Part of the beauty of leverage is that it allows you to spread your wings when trading, branching out more than you ever would have been able to without it. To reap the most benefit from leverage, trade with EagleFX, a brokerage that is providing leverage up to 1:500 to all clients. Remember, leverage is not to be feared and should actually be embraced, provided that it is used wisely.

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