Currency Pairs
You may be guessing: "What are the most traded currency pairs in the Forex market? What are Forex pairs? How do they work? Why do traders bet on them?" We'll cover everything in this article! So, go ahead!
Majors
"What are the most traded currency pairs on Forex?" — you ask. They are called Majors. You know these pairs are like big bosses in the world of currencies!

Note! All the Majors contain the USD, and they make up nearly 80% of trade volume in the FX market universe.

What are the major pairs in Forex? There are 7 major pairs: EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD, AUD/USD, and NZD/USD.
Major pairs are associated with the global strongest economies and are traded in high volumes. As a rule, higher volumes imply smaller spreads.

All that means that the Majors are less affected by manipulation. In other words, they are more liquid, and it's lit!

This is the same answer to "what are the best Forex pairs to trade?" since they are associated with massive volumes. It happens because they are the most traded currency pairs in the Forex market and usually have the lowest spread. You can easily find tons of analysis on them.

Now try to guess the most traded currency pair:

  • A. EUR/GBP
  • B. EUR/USD
  • C. GBP/USD


Do I hear EUR/USD? Exactly! The EUR/USD is the most traded currency pair in Forex taking nearly 24% of all the Forex turnover.

It's no wonder since the Euro and the US Dollar represent the two largest economies in the world.

By the way, do you know that some currencies have exclusive nicknames in the Forex market? It's a kind of professional jargon used by traders. For a better understanding:

Crosses
Currency pairs that don't include the US dollar are called Crosses.
This name derives from the fact that these pairs are actually a combination (or cross) of two major pairs.

For example, selling the AUD/CHF pair means that you sell two Majors at the same time – AUD/USD with a proportionate amount of USD/CHF.

Historically, cross pairs were converted first into USD and only then into the desired currency. However, you can exchange then directly these days.

The most-traded crosses are based on the three major non-USD currencies: EUR, JPY, and GBP. But we want to provide you with a bit wider list:

In the FX market, cross pairs have one more name. Try to guess it!

  • A. Minors
  • B. Minions
  • C. Mixes


Good point on choosing Minors as the answer! This is what cross pairs are also known as.

How do the crosses differ from the majors? And what kind of pairs should one choose for trading? Let's compare them.

As a rule, the crosses are more volatile than the majors. What's volatility? Bro, it simply means that the currency value can change suddenly and often. Boom!

Although cross pairs are not so frequently traded as the majors, they still provide many trading opportunities.

The thing is, the crosses are not so attached to USD. So, while most markets will only base on pro-USD or anti-USD sentiments, you can find new ways to profit thanks to different price movement behaviors of the crosses.

Exotic currency pairs
The exotic pairs (or simply Exotics) are called this way just because they are rarely traded or spoken about.
An exotic pair can be described as a formula: major currency + currency from emerging or smaller economies. Here are some examples:
Curious fact: if a currency is called 'exotic,' it doesn't mean it is poorly valued. It has more to do with its popularity among traders, not how developed a nation is.

Great examples are the Kuwaiti Dinar (KWD) and Saudi Arabian Riyal (SAR). Both currencies are considered high-value currencies but are still on the list of exotics.

By the way, did you know that both CNH and CNY refer to the Chinese Yuan Renminbi? Since the China Forex market is controlled and not fully opened yet, China created an offshore version of its currency. So, while the yuan is called CNH in the offshore market, the mainland China market still refers to CNY.

Remember: not all of the existing currency pairs are traded in the Forex market. Imagine if you had to pair each of 180 currencies up with another. Yep, this is the impressed number of currencies recognized by the United Nations!

Are there some differences when trading exotic pairs, in comparison with the major and cross pairs?

Sure, buddy! There are two main things you need to know before trading exotic pairs:

  1. They are more volatil than the Majors.
  2. They are less liquid than the majors.


Lemme explain. When we say that the market is more volatile, price movements are more frequent and, perhaps, more dramatic. Can high volatility provide higher profits? Possibly. And higher risks? Inevitably!

As for low liquidity, it most often happens because of a lack of market participants who would take the other side of your order. For the same reason of low liquidity, exotic currency pairs are usually way more sensitive to economic and geopolitical events.

Note: low liquidity makes exotic pairs more expensive to trade because they have wider bid-ask spreads.

We recommend that you go with the most popular exotic pairs to ensure greater liquidity.
So, if you want to trade exotics more safely and not to lose money because of election results or something else, consider this in your decision, my friend.

Psst, bro! If you need the details, take the interactive Forex tutorials built-in Forex Tester!
So…
What kind of pairs to trade and what to stay away from is up to your personal style. When getting experience, you will polish your trading choices and possibly even get some bruises.

Yes, this has been the ache for many traders. However, some of them thought: "Hey, no more bruises! Let's create software that simulates the market using real historical data. So, we can get all the needed experience there without losing any money, and then apply all our knowledge and skills in the real market!" That's when Forex Tester was created.
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