Your charting software and your trading platform probably offer you dozens of different currency pairs to trade. Some of these Forex pairs may include your account currency while others may not. Some may be simple, basic pairs you have heard of — GBP/USD, GBP/JPY, USD/CHF, EUR/USD, and so on. Others may look like nonsensical combinations of letters to you. Should you trade exotic currency pairs at all, or should you stick to the more basic pairs? Should you bother with cross currency pairs that do not include your account currency? Are some pairs better than others? How many pairs should you trade?
There is no one-size-fits-all answer to any of these questions. Generally speaking, the more basic Forex currency pairs will have higher trading volumes than the obscure pairs. Volatility may be something that you want to steer towards or away from, depending on what kind of a trader you are. If your method mostly involves catching big trends, you will need to find pairs that tend to trend heavily. If you are good at making money in ranging markets, then this may not be as big a requirement for you. Choppiness is something you will want to avoid regardless of your method since it can result in a lot of fakeouts.
Every Forex currency pair has its own distinctive personality, and every pair also transforms with time. That means that a pair, which works for you one year, may fail the next. A pair, which performs great for you on one timeframe, may be awful on another — and that same reality may reverse some time later. Start out by watching a variety of Forex currency pairs, and try to get a feel for their personalities at that point in time. You can also look over historical data to get a feel for how pairs have behaved in the past. Then you can start backtesting currencies that look as though they may work well with your system. Your method may perform very well on one pair and very poorly on another — and that relationship could change completely over time.
Some Forex traders stick with one or several pairs all of the time in order to keep things simple — while others trade dozens of pairs according to whatever seems to be offering the best setups. This is entirely a question of personal style and comfort as well as a question of what is going to make the most sense with your trading method. Backtesting offers a great starting point for choosing pairs to demo test on, but be aware that the changing nature of the market means you may either have to go back to backtesting now or in the future, or you may need to find a way to incorporate those changes into your trading plan in real-time while demo testing. Either way, make sure you have demo tested successfully and have several consecutive months of consistent profits on whatever currency pairs you are planning to trade before you go live with any of them.