Forex trading with major currency pairs is described as one of the most lucrative form of forex trading. These pairs are the most sought for as far as the forex market is concerned. Forex trading major currency pairs are high in demand and basically, all forms of forex traders and investors take advantage of this concept and maximize profit.
A currency pair (e.g. USD/CAD) is a quotation and primary structure of currencies which are traded in the foreign exchange market. A currency pair has two abbreviations in which the first outlined currency of the currency pair is called the base while the second currency of the currency pair is called the quote currency. The major indication of a currency pair is how much of a quote currency is needed to purchase on unit of a base currency.
TYPES OF CURRENCY PAIRS FOUND IN THE FOREX MARKET
MAJOR CURRENCY PAIRS
As earlier said, these currency pairs contain the US dollar on one side of the currency pair either on the base or the quote side. They are called major currency pairs because they are the most frequently traded. They include EUR/USD Euro/United States, USD/JPY United States/ Japan, GBP/USD United Kingdom/United States, USD/CAD United States/ Canada, USD/CHF United States/Switzerland, AUD/USD Australia/United States, NZD/USD New Zealand/ United States.
MINOR CURRENCY PAIRS
These are currency pairs that do not contain the US dollar. They are also called cross currency because they need to be converted into the US dollar before it can be converted into the desired currency. They include EUR/GBP, EUR/CHF, EUR/CAD, EUR/ AUD, EUR/NZD, EUR/JPY, GBP/JPY, CHF/JPY, CAD/JPY, AUD/JPY, NZD/JPY, GBP/CHF, GBP/AUD, GBP/CAD.
These are currencies that are made up of a major currency pair with a strong but smaller economic currency from a global perspective. They are not traded as often as the major and minor currency pairs. They are EUR/TRY, USD/SEK, USD/NWK, USD/DKK, USD/ZAR, USD/HKD, USD/ SGD.
THE POPULARITY OF FOREX TRADING MAJOR CURRENCY PAIRS IN THE FOREX MARKET
Major currency pairs are the most wanted by forex traders in the forex market, this is majorly because the US dollar is the strongest, dominant and most frequently traded currency in the world. Any currency associated with or paired with the US dollar which is seen in the case of major currency pairs automatically inherits these characteristics.
Forex trading major currency pairs have a high rate of trade value. This simply means that they are highly liquid because the larger the trade value between two different countries, the more liquid the currency pair of these countries. Aside from having a high rate of liquidity, these forex trading major currency pairs are high volatile.Their volatility rate is mostly due to its liquidity ratio.
In conclusion, Major currency pairs are specifically made of currencies from the world’s largest economy. The highest amount of trades in goods and services are conducted with nations which have affiliations with this currency pairs.They are politically and economically stable and this unique fact boosts their wants especially in times of economic uncertainty.
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