The forex market has the largest trading volume in the world. Daily trading volume exceeds USD5.3 trillion*. Traders take either a long or short position based on their speculation of the currencies’ future trend – whether the value will go up or down.
7 major currency pairs (The Majors) make up almost 80% of total daily trading volume* in the forex market. As shown in the table below, the major currency pairs all include the U.S. Dollar (USD).
Major Currency Pairs
|Great British Pound/U.S. Dollar||GBP/USD||CABLE|
|U.S. Dollar/Japanese Yen||USD/JPY||YEN|
|U.S. Dollar/Swiss Franc||USD/CHF||SWISSY|
|U.S. Dollar/Canadian Dollar||USD/CAD||LOONIE|
|Australian Dollar/U.S. Dollar||AUD/USD||AUSSIE|
|New Zealand Dollar/U.S. Dollar||NZD/USD||KIWI|
Minor Currency Pairs
While major currency pairs dominate the market, you shouldn’t ignore the minors – also known as Cross Currency Pairs. All currency pairs other than the major ones are considered to be minors; e.g. EUR/GBP, EUR/CHF and GBP/JPY.
The options are many. But which currencies should you trade? Traders new to the market should follow the golden rule of focusing on only one or two currency pairs.
In general, traders will opt for EUR/USD or USD/JPY as there are plenty of information and resources available about the relevant economies. Unsurprisingly, these two pairs account for the majority of the market’s global daily volume.