Major Currency Pairs: Guide to Top Pairs and AlgoTrading Tips

If a positive piece of news hits the markets about a certain nation or region’s economy, it will encourage investment and increase demand for that nation’s currency. On the flip side, if negative news breaks, demand is likely to drop. In general, currency performance tends to reflect the economic health of the nation they represent. The ‘base’ currency is always listed first in a forex pair, with the ‘quote’ currency listed second.

Step 4: Consider the trading strategy

The majors are the most liquid and widely traded in the forex market. Because these pairs have the largest volume of buyers and sellers, they also typically have the tightest bid (buy) and ask (sell) spreads. Most traders would agree that the most profitable forex pairs to trade include the above seven major forex pairs. In forex trading, commodity pairs are different from major pairs. The major pairs (EUR/USD, USD/JPY, GBP/USD, and USD/CHF) are the four most traded currency pairs in the forex market. There are an additional three commodity pairs involving the U.S., Canadian, Australian, what is the best elliott wave software and New Zealand dollars.

Automated Trading for Forex Pairs

Using Expert Advisors (EAs) to trade major currency pairs can streamline the process and offer consistency in execution. Algorithmic trading involves using automated systems, like Expert Advisors, to execute trades based on set criteria. Major currency pairs are well-suited for this approach due to their high liquidity and tighter spreads, supporting rapid trade execution without high transaction costs. Major currency pairs are the most traded pairs in the Forex market, representing the currencies of the world’s largest economies. These pairs typically include the US Dollar (USD) and a currency from a major economy such as the Euro (EUR), Japanese Yen (JPY), British Pound (GBP), or Swiss Franc (CHF). It can experience significant volatility during major news releases and events impacting either economy.

1. Many EAs are designed with specific currency pairs in mind, tailored to match each pair’s typical market behavior.
2. Bigger price fluctuations can ultimately lead to bigger profits, if you’ve made the correct call to buy or sell a currency pair.
3. There are several strategies you could use when trading on currency pairs, depending on the length of the trade, the specific pair and the size of your position.
4. These are all things to take into consideration when trading on currency pairs.
5. Exotic currency pairs involve a currency from a large, developed country and a currency with a far smaller trade volume.

As we covered earlier, different forex pairs uniquely react to economic indicators. For example, USD is highly influenced by US economic indicators such as its GDP, industrial product, and employment figures. Therefore, when trading major forex pairs, keeping up with the US economic news is essential. Depending on the pair, the price of these currencies is severely influenced by economic indicators. Currency markets are popular among traders and investors, but some of the terminology can seem a little complicated at first. Discover what a currency pair is and what the difference is between a major and a minor currency pair.

The base currency is always equal to one, while the quote currency represents the current price of the pair. We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey. Forex trading is the simultaneous buying of one currency and selling of another.

By understanding these patterns, you can optimize your trading strategy. If How to buy bnb you’re trading part-time or can only trade during certain hours, choose the most liquid pairs during those times. This gives you access to tighter spreads, smoother price movements, and potentially better trading results. These pairs are typically influenced by local economic factors, political conditions, and market sentiment.

Forex Trading Strategy Guide

For example, you might exchange your local currency for US dollars atfx trading platform before going on holiday to the United States. However, the vast majority of currency conversion is done by forex traders looking to turn a profit. A trader may buy the EUR/USD pair if they believe the euro will increase in value relative to the dollar. Buying the EUR/USD dollar pair can also be referred to as ‘going long’. Alternatively, a trader could sell the EUR/USD pair – also known as ‘going short’ – if they believe the value of the euro will go down relative to the dollar.

Best Currency Pairs To Trade & Most Volatile Forex Pairs 15 Major Forex Pairs List

For example, while historically Japanese yen would rank above Mexican peso, the quoting convention for these is now MXNJPY, i.e. ‘Day traders’ buy and sell currencies over the course of a single day, closely monitoring market movements. They can typically be purchased with a low ‘bid-ask spread’ – the difference between the price at which a broker will sell a pair, and the price at which they’ll buy it.

Per 2019 data, the US Dollar accounts for 88%+ of trading volume, followed by 32%+ for the Euro, 16%+ for the Japanese Yen, and 12%+ for the British Pound. The seven major currency pairs account for 75%+ of all Forex trading volume. Therefore, they are the currency pairs with low spreads due to their liquidity. Minor currency pairs include at least one of the world’s main currencies, excluding the US dollar. There are a greater number of minor currency pairs than major pairs, with more possible permutations available. Popular minor forex pair markets include GBPCHF, SGDJPY and EURCAD.