Forex Currency Pairs – Frequently Asked Questions

Forex trading on the surface made seem simple, but if you dig a little deeper you will see that there is a lot for someone to be confused by. Thankfully, when it comes to forex currency pairs help is at hand. The following looks at many of the frequently asked questions and gives you the answers you need to start trading today.

What are the major forex currency pairs?

The four leading forex currency pairs are the EUR/USD, GBP/USD, USD/JPY, and USD/CHF.

What are the most popular forex currency pairs?

Out of the four major forex currency pairs, the one that is traded the most is the EUR/USD. In fact, EUR/USD forex trades accounts for approximately 70% of all forex trades made. Obviously this doesn’t mean that it accounts for 70% of private trades made, but it does mean that the world definitely places increased focus on the EUR/USD currency pair above any other. In terms of popularity amongst low-level traders you may find that the GBP/JPY or EUR/JPY takes the most popular crown, but both of these do suffer from increased volatility, meaning that big profits can be made from them but also big losses.

What are the most liquid forex currency pairs?

Due to its high trading volume, the EUR/USD qualifies as the most liquid forex currency pair. However, within the world of forex it is doubtful that you will encounter any liquidity issues due to the size of the market and the relentless trading that takes place.

What are the most active and volatile forex currency pairs?

GBP/USD and GBP/JPY qualify as the two most active forex currency pairs, with the latter usually being one of the most volatile as well.  What should be noted is that the GBP/JPY and EUR/JPY usually operate in the same direction, so when one goes up or down the other tends to do the same. A rule of thumb is that GBP or USD will almost always be a feature of the most traded forex currency pairs.

What is the best time to trade?

This is arguably the biggest and most asked question when it comes to forex currency pairs. In many instances the answer can be highly subjective. The basis for a trading time should be to trade when a currency is showing signs of forming a short and sharp signal. There are three key trading windows that most of the people in the world are aware of and they are often labelled as “sessions”. The London session is from 8am to 4am GMT; the New York session is from 8am to 4pm EST, and lastly the Asian session from 7pm to 3am EST. It should be noted that the forex market is at its most volatile during the London and New York sessions, which is between 8am and 1pm EST. After they close things tend to slow down until the Japan and Australian exchanges pick up in activity. Finding the right time to trade will depend on your trading needs, but it should be a rule that you steer clear of times of high market volatility.

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

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