This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you.

• Experts recommend trading currency pairs such as USD to EUR, USD to JPY, USD to CAD, GBP to USD, USD to CHF and AUD to USD.
• Follow the news, because the most traded currency pair can change any time.
• It is of great importance what the economy of a particular country is based on.
• Crypto-currency pairs represent the relative value between a cryptocurrency and a fiat currency, such as USD or EUR.

For example, if you sell the EURUSD (also referred to as going “short”), you are simultaneously selling the Euro and buying the US dollar. There are essentially two ways in which any currency pair can move higher or lower. I’ll also share my favorite pairs to trade, and which ones to avoid. But then World War I happened, the gold standard was abandoned and the Scandinavian Monetary Union disbanded. These countries decided to keep the currency, even if the values were separate from one another.

Different types of forex pairs

But seriously, I’ve always said that the process of becoming a great Forex trader is more important than the destination. And if you want to become consistently profitable, it’s essential that you understand everything there is to know about the currency https://trading-market.org/ pairs you’re trading. This is my favorite part because now we get to dig into the various classifications of currency pairs. And later, I’ll uncover the pairs that are affected by changing commodity prices as well as a few of the safe haven currencies.

There are 180 legal currencies in the world, as recognized by the United Nations. This is because with more volume, spreads between the bid and ask price tend to narrow. They thus tend to have smaller spreads than exotic pairs and attract the most traders to them, which keeps the volume high. Let’s take a quick look at the six best forex pairs to implement into your forex trading strategy. Interestingly, USD/DEM was the most widely traded currency pair before the Euro was introduced. The Deutsche Mark was the second-largest reserve currency in the world at the time, which attracted traders’ interest.

Currency Pairs and Exchange Rates

These are the least traded in the forex market, and are less liquid than the cross pairs. Prices can fluctuate greatly, and due to the lower volume of trades, spreads can be wide. There also tends to be less historical https://forex-world.net/ data on these pairs, so those relying on technical analysis may find information harder to come by. Major currency pairs are the most traded in the forex market because of their popularity and higher liquidity.

Exotic currency pairs can be traded at any forex broker, with some brokers offering a larger variety than others. With Axi, you can trade over 40 exotic currency pairs with spreads ranging from 1.2 to 189. To start your journey as a forex trader, it is better to trade currency pairs from the major and minor groups as there is more trade activity for these pairs and you’ll find lower spreads. For more experienced traders, exotic pairs can be riskier but these risks could potentially pay off, as long as you know what you’re doing. They involve the currencies euro, US dollar, Japanese yen, pound sterling, Australian dollar, Canadian dollar, and the Swiss franc. While there are at least 8 major currencies in the world, there are only 7 major currency pairings that are traded on the foreign exchange market.

Example of a major pair price quote and fluctuation

EURUSD, USDJPY, GBPUSD, USDCHF, USDCAD, AUDUSD, and NZDUSD are all majors. At the same time, if you were to buy both currency pairs, you’ve contradicted yourself. For example, if you sell two negatively correlated pairs, chances are only one of the two trades will be successful. This is one reason why I’m not an advocate of mastering one or two currency pairs at a time. In fact, making this mistake can quickly lead to forcing trades and overtrading.

This has made the franc a popular currency in times of economic uncertainty or market turmoil, as traders seek markets that are perceived as lower risk – similar to the USD/JPY pair. Some of the most traded of these are https://forexhistory.info/ the GBP/EUR, EUR/CHF and EUR/JPY. Just like the first two most popular currency pairs on this list, the quote price of GBP/USD is affected by the respective interest rates set by the Bank of England (BoE) and the Fed.

The Complete Forex Currency Pairs Guide (2023 Update)

The Japanese government places a high premium on keeping the value of the yen low to cultivate a competitive export market. If you hold USD, you can potentially create large profits by capitalizing on these daily fluctuations if you’re able to buy in at the right time. The exchange rate plays a key role in determining the profitability of currency pair investments. When you place a trade on a currency pair, you’re essentially buying one currency and selling another – but in a single transaction. So for example, going long or ‘buying’ EUR/USD means you’re buying the euro and selling the US dollar. Going short means that you’re ‘selling’ the Euro and buying the US dollar.

• This volatility can make it a better choice for speculative trading.
• At FXOpen, clients can trade currency pairs via contracts for difference (CFDs).
• If you hold USD, you can potentially create large profits by capitalizing on these daily fluctuations if you’re able to buy in at the right time.
• The Japanese government places a high premium on keeping the value of the yen low to cultivate a competitive export market.

Our forex indices are a collection of related, strategically-selected pairs, grouped into a single basket. Trade on our 12 baskets of FX pairs, including the CMC USD Index and CMC GBP Index. We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey. For example, a political scandal or unexpected election results can cause an exotic pair’s exchange rate to swing violently.