Forex trading is more than trading the United States dollar as part of a currency pair. Forex trading includes trading all major and minor currencies from the pound sterling to the South African Rand.
The most commonly traded currencies are as follows:
United States Dollar USD
Euro EUR
Yen JPY
British Pound GBP
Swiss Franc CHF
Canadian Dollar CAD
Australian Dollar AUD
These are referred to in Forex trading as major currencies.
Two less traded currencies are the New Zealand Dollar, NZD, and the South African Rand, ZAR. In theory you could trade any pair of currencies in the world. However, as a practical matter this is not the case. You need market size and volume to make a successful business of trading. Otherwise you are investing in a currency and hoping that you can find a buyer when you want to sell.
If you choose to buy the currency of a small country you may not find a buyer when you want to get out. You can always find a buyer for Euro, dollars, and yen, at the current price.
For the technical trader it may not make any difference which currency pair one trades and whether one trades the US dollar or does cross currency trading. However, for one who is more knowledgeable of currencies and national economies outside of the USA it may make more sense to trade Yen versus Pound sterling, for example. Also, cross currency trading in a currency pair from the same part of the world may make more sense as the nations will likely be trading partners. For example, Australia is a supplier of raw materials to China, Singapore, Japan, India, and other Asian nations. If you are interested in or know more about those economies, then trading in those currency pairs in cross currency trading will make more sense than trading dollars and Euros.
Be aware, however, that the margins in Forex trading are thin and if the relative values of two Eastern Hemisphere currencies change relative to each other they will immediately change in relation to all other world currencies too. Whatever currency pair you trade is interconnected with all other currency pairs. The problems you might run into with cross currency trading in minor currency pairs is volume and liquidity. As Forex trading software is more accurate at high volumes it may be wise to only do cross currency trading of minor currency pairs when the volume is sufficient to provide the liquidity you need for successful Forex trading.
Also, be aware that Forex trading in the Japan market may involve more local currencies so, if your Forex trading involves trading in Asian currency pairs, especially cross trading in these currency pairs, you may want to trade the Japan market where you might expect more volume and more accurate predictions from your Forex trading software.
Whether your Forex trading involves minor currency pairs, cross currency trading, or sticking to trading the dollar versus the Euro or Yen, all of the same admonitions apply. Do your homework, keep focused, and avoid the pitfalls of falling prey to market psychology.