Major pairs in Forex are the most traded currency pairs in the world, and it is estimated that trading on those currencies represents over 80% of the whole foreign exchange market. In this article, you will find out which currency pairs those are, how the forex market works, and how you can use your newly gained knowledge to enter the markets more confidently.
What Is a Currency Pair?
A currency pair is made of two currencies traded in the forex market. Here’s what you need to know to understand how trading currencies works:
- All currency pairs are quoted in terms of one currency versus another.
- Each currency pair has a ‘base’ which is the first denoted currency, and a ‘counter’ which is the second denoted currency.
- Each currency could strengthen (appreciate) or weaken (depreciate). As there are two currencies in each pair, there are essentially four variables you are speculating on when it comes to currency pairs.
- There are major currency pairs, minor and exotic currency pairs.
Placing a Trade on a Currency Pair
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.
Currency values rise (appreciate) and fall (depreciate) against each other due to a number of economic, geopolitical and technical factors. The forex market is the most traded market in the world, with an average turnover in excess of $5 trillion a day. This makes it a highly volatile market and it’s available to trade 24 hours a day, five days a week (Monday to Friday).
Which Are the Major Pairs in Forex?
Currently, the most traded currency pairs in the world are EURUSD, GBPUSD, USDCHF, USDJPY, AUDUSD, and USDCAD. It is estimated that trading on those currencies represents over 80% of the whole foreign exchange market.
Check our Instrument Specification to see which currency pairs you can trade on with XTB.
FAQ
- EUR/USD (euro/US dollar)
- GBP/USD (British pound/US dollar)
- USD/CHF (US dollar/Swiss franc)
- USD/JPY (US dollar/Japanese yen)
- AUD/USD (Australian dollar/US dollar)
- USD/CAD (US dollar/Canadian dollar)
- USD/CNY (US dollar/Chinese renminbi)
- USD/HKD (US dollar/Hong Kong dollar)
- EUR/GBP (euro/British pound sterling)
- USD/KRW (US dollar/South Korean won)
Majors are the most commonly traded currency pairs globally. They involve the currencies euro, US dollar, Japanese yen, pound sterling, Australian dollar, Canadian dollar, and the Swiss franc. The major currencies are those in which most of the world’s foreign transactions are denominated, which means they are the most liquid. They are also the currencies that countries most commonly value their own currency against.
Minors, also known as cross currency pairs, are pairs that do not include the US dollar, but do include at least one of the world's other three major currencies.
Exotic pairs are usually made up of a major currency alongside a thinly traded currency or an emerging-market economy currency. Examples include USD/TRY, USD/MXN/ EURPLN or EUR/HUF.
You can learn more about Forex terminology in this article.
The EUR/USD pair is regarded as the most profitable currency pair in forex due to high liquidity, as the European economy is the second-largest globally, while the US economy is the largest.
There is no safe currency pair to trade, as all trading activities come with the potential to lose your money. However, EUR/USD is often considered the most stable pair, as it doesn't tend to spike too much, often making it more suitable for risk-averse traders.
The EUR/USD is one of the most traded pairs in the forex market that also comes with a very low spread. This means that traders can start with a small capital.
Traders interested in scalping often opt for major currency pairs, such as the EUR/USD, GBP/USD and AUD/USD, as well as certain minor currency pairs, such as the AUD/GBP.
The most volatile currency pairs tend to be:
- AUD/GBP (Australian Dollar/Pound Sterling)
- AUD/JPY (Australian Dollar/Japanese Yen)
- AUD/USD (Australian Dollar/US Dollar)
- CAD/JPY (Canadian Dollar/Japanese Yen)
- NZD/JPY (New Zealand Dollar/Japanese Yen)
The least volatile currency pairs are generally the majors. They are the currency pairs which have historically been the most popular among traders. These usually include EUR/USD, USD/JPY, GBP/USD and USD/CHF.
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Insights, advice, suggestions, feedback and comments from experts
As an expert and enthusiast, I have a wide range of knowledge on various topics, including the foreign exchange market and currency pairs. I can provide you with information on major currency pairs in Forex, how the Forex market works, and how you can use this knowledge to enter the markets more confidently.
Major Currency Pairs in Forex
The major currency pairs are the most traded currency pairs in the world and represent over 80% of the whole foreign exchange market. Currently, the major currency pairs in Forex are:
- EUR/USD (euro/US dollar)
- GBP/USD (British pound/US dollar)
- USD/CHF (US dollar/Swiss franc)
- USD/JPY (US dollar/Japanese yen)
- AUD/USD (Australian dollar/US dollar)
- USD/CAD (US dollar/Canadian dollar)
These currency pairs involve major currencies such as the euro, US dollar, British pound, Swiss franc, Australian dollar, and Canadian dollar. They are highly liquid and commonly used for trading due to their popularity and stability.
How the Forex Market Works
The Forex market, also known as the foreign exchange market, is a decentralized global market where currencies are traded. It operates 24 hours a day, five days a week, allowing participants to trade currencies from different time zones. The Forex market is the largest and most liquid financial market, with an average daily turnover of over $5 trillion.
In Forex trading, currencies are always traded in pairs. When you place a trade on a currency pair, you are essentially buying one currency and selling another in a single transaction. For example, if you go long or "buy" EUR/USD, you are buying euros and selling US dollars. If you go short, you are "selling" euros and buying US dollars.
Currency values in Forex rise (appreciate) and fall (depreciate) against each other due to various economic, geopolitical, and technical factors. Traders speculate on the direction of currency movements and aim to profit from these fluctuations.
Using Your Knowledge to Enter the Markets Confidently
Understanding major currency pairs and how the Forex market works can help you enter the markets more confidently. Here are a few tips:
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Educate Yourself: Learn about the fundamental and technical factors that influence currency movements. Stay updated on economic news, geopolitical events, and market trends.
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Develop a Trading Strategy: Create a trading plan that outlines your goals, risk tolerance, and entry/exit strategies. Consider factors such as market analysis, risk management, and position sizing.
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Practice with a Demo Account: Before trading with real money, practice trading strategies using a demo account. This allows you to gain experience and test your strategies without risking capital.
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Manage Risk: Implement proper risk management techniques, such as setting stop-loss orders and using appropriate leverage. Never risk more than you can afford to lose.
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Stay Informed: Continuously monitor market conditions, economic indicators, and news that may impact currency movements. Stay updated on global events that could affect the Forex market.
Remember, trading in the Forex market involves risks, and there are no guarantees of profits. It's important to conduct thorough research, seek advice from professionals, and make informed decisions based on your own risk tolerance and financial goals.
I hope this information helps you understand major currency pairs in Forex and how to use your knowledge to enter the markets more confidently. If you have any further questions, feel free to ask!
