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Friday, June 28, 2013

Major Forex pairs

I start the blog by discussing major Forex pairs. There are a lot of currency pairs that you can speculate on, but it is important to find the ones that fit your trading style best. Why? Because, volatility, turnover and volume vary in those pairs and various market participants trade those. So, each pair can behave differently and so you should trade them accordingly. Before we go on to major Forex pairs I have to say that there exist so called minor or crosses that as I have said have much smaller volume, but can still present you with a lot of opportunities. But I will talk on the crosses in my next post. So what are the majors? Let us take them one by one.

The king of Forex: eur/usd pair

This is considered one of the best pairs and it gets the biggest turnover in the market. Some statistics in the past said that it takes around 34 percent of transactions of all market volume. That is why it can be called the king of Forex. The pair can be easily analyzed both fundamentally and technically.

The second spot for: usd/jpy

It is very volatile pair and not so orderly as eur/usd. You can see a lot of choppy price action in Dollar Japanese Yen pair daily. Statistics say that it takes around 12 percent of all transactions in the Foreign Exchange Market. So, you can easily trade a lot of standard lots in the pair and just as easily get out of your positions as you got into them.

The bronze medal for: aud/usd

It is strange, because I thought that it should go to gbp/usd, but I was wrong. So, Australian Dollar and US Dollar pair gets 11 percent of all market orders. It is also rather choppy like usd/jpy pair, but forms very nice ranges and you can trade reversals at the tops and bottoms.

The fourth place is for: gbp/usd

A lot of traders like Pound pairs, because they are extremely volatile. British Pound and US Dollar pair gets about 9 percent of volume in fx market. It is second best to eur/usd in terms of technical patterns and the way it moves.

Fifth place for: usd/cad

Canadian dollar is probably the champion of choppy price action. I hardly ever trade it. However, it gets about 7 percent of market volume daily. Quite a thing!

Sixth place for: usd/chf

US Dollar and Swiss Franc pair very much resembles price action of eur/usd. We can say that whatever happens to eur/usd will also happen to usd/chf. So, if you do not like eur/usd, you might consider usd/chf for a change. It gets about 3 percent of daily market volume.

Seventh place: nzd/usd

It gets much smaller volume and is usually placed together with currency crosses in terms of volume, but as it is US dollar denominated pair it is among the majors. It forms nice trends and often goes shoulder to shoulder with aud/usd pair.


Next time I will cover some of the main Forex crosses. Well, maybe all of them!