The Basics Of Currency Pairs Explained

Foreign currency exchange trading, otherwise known as forex trading, in theory, is a simple process. In many ways this is true, but it is hard to be successful without a lot of skill and expertise within your arsenal. The skill aspect requires a lot of trial and error, but for expertise, this can be picked up with sufficient research. If you feel the downfall of your foreign currency exchange trading strategy is due to lack of understanding of currency pairs do not worry, as we are here to help. This article will take an in-depth look into currency pairs and will help explain the best to trade and which to avoid.

The basics of currency pairs explained

What currency pairs are classed as ‘majors’?

 

Currency pairs are either deemed to be ‘minors’ or ‘majors’. For beginners, it is best to only focus on the ‘majors’. This includes pairs such as EUR/USD, GBP/USD, USD/CHF, and USD/JPY. When considering your foreign currency exchange trading portfolio, these major pairings should be the foundation of what you trade around.

What currency pairs rank as most popular?

 

In terms of popularity, it shouldn’t be a surprise that the ‘majors’ dominate the charts. From a volume perspective, EUR/USD is easily the most popular, consisting of around 70% of total transactions, showing that the world traders have a lot of time for this pairing in particular. However, that doesn’t mean other currency pairs aren’t traded regularly. When you analyse the stats, you will see pairs like GBP/JPY, GBP/USD, and EUR/JPY are also favourites in the foreign currency exchange trading world.

What currency pairs are most liquid?

 

You should already know that liquidity is essential to success in foreign currency exchange trading. EUR/USD is considered to be the most liquid, mainly due to the high transaction volume. While this is true, you will unlikely find liquidity to be a problem when trading foreign currency. Generally, with the size of the market being so big, it would be rare to not be able to find another trader to complete a trade via.

 

What currency pairs are the best to trade?

 

This question in itself is highly subjective, as traders will have their own personal preference. That is just the nature of foreign currency exchange trading. If you really want to determine it for yourself, take a look at the signals, or more specifically, look for sharp growth signals.

When is the best time to trade forex?

 

Foreign currency exchange trading is a market open 24 hours a day, so it literally never sleeps. The question of when is the best time to trade is highly dependent on your own personal portfolio and what currency pairs you currently own. Furthermore, it is dependent on what currency pairs you will wish to acquire. For example, a UK-based trader would not find it worthwhile to trade substantially in the early hours of the morning, as most of the movement within the GBP will not be happening then.

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.

Foreign currency exchange trading, otherwise known as forex trading, in theory, is a simple process. In many ways this is true, but it is hard to be successful without a lot of skill and expertise within your arsenal. The skill aspect requires a lot of trial and error, but for expertise, this can be picked up with sufficient research. If you feel the downfall of your foreign currency exchange trading strategy is due to lack of understanding of currency pairs do not worry, as we are here to help. This article will take an in-depth look into currency pairs and will help explain the best to trade and which to avoid.

What currency pairs are classed as ‘majors’?

 

Currency pairs are either deemed to be ‘minors’ or ‘majors’. For beginners, it is best to only focus on the ‘majors’. This includes pairs such as EUR/USD, GBP/USD, USD/CHF, and USD/JPY. When considering your foreign currency exchange trading portfolio, these major pairings should be the foundation of what you trade around.

What currency pairs rank as most popular?

 

In terms of popularity, it shouldn’t be a surprise that the ‘majors’ dominate the charts. From a volume perspective, EUR/USD is easily the most popular, consisting of around 70% of total transactions, showing that the world traders have a lot of time for this pairing in particular. However, that doesn’t mean other currency pairs aren’t traded regularly. When you analyse the stats, you will see pairs like GBP/JPY, GBP/USD, and EUR/JPY are also favourites in the foreign currency exchange trading world.

What currency pairs are most liquid?

 

You should already know that liquidity is essential to success in foreign currency exchange trading. EUR/USD is considered to be the most liquid, mainly due to the high transaction volume. While this is true, you will unlikely find liquidity to be a problem when trading foreign currency. Generally, with the size of the market being so big, it would be rare to not be able to find another trader to complete a trade via.

 

What currency pairs are the best to trade?

 

This question in itself is highly subjective, as traders will have their own personal preference. That is just the nature of foreign currency exchange trading. If you really want to determine it for yourself, take a look at the signals, or more specifically, look for sharp growth signals.

When is the best time to trade forex?

 

Foreign currency exchange trading is a market open 24 hours a day, so it literally never sleeps. The question of when is the best time to trade is highly dependent on your own personal portfolio and what currency pairs you currently own. Furthermore, it is dependent on what currency pairs you will wish to acquire. For example, a UK-based trader would not find it worthwhile to trade substantially in the early hours of the morning, as most of the movement within the GBP will not be happening then.

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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