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Forex trading course: Major currency pairs

People frequently ask which currency pairs are traded the most. Sure, some people like to deal in the Czech koruna or Mexican peso, but really when trading Forex, we are only dealing with a handful of the biggest pairs.

The main Forex trading pairs

The Euro/US Dollar

EUR/USD

The US Dollar/Swiss Franc

USD/CHF

The British Pound/US Dollar

GBP/USD

The US Dollar/Japanese Yen

USD/JPY

The Australian Dollar/US Dollar

AUD/USD

The US Dollar/Canadian Dollar

USD/CAD

The Euro/Swiss Franc

EUR/CHF

(But at the time of writing, the euro is "pegged" to the CHF at the rate of 1.20, so in practical terms it's not meantime a viable pair to trade.)

The Euro/Japanese Yen

EUR/JPY

The Euro/British Pound

EUR/GBP

The British Pound/Australian Dollar

GBP/AUD

The British Pound/Canadian Dollar

GBP/CAD

The British Pound/Swiss Franc

GBP/CHF

The British Pound/Japanese Yen

GBP/JPY

The British Pound/South African Rand

GBP/ZAR

The US Dollar/South African Rand

USD/ZAR

The New Zealand Dollar/US Dollar

NZD/USD


Even this collection of currency pairs is more than most people will trade. The majority of dealers trade the seven most liquid currency pairs in the world, ie, the ones that move the most - anyway, spread costs tend to be pretty high outside of the 7 noted below, which makes them harder to trade for the "little guy".

These are the four 'majors'

EUR/USD (euro/dollar)

USD/JPY (dollar/Japanese yen)

GBP/USD (British pound/dollar)

USD/CHF (dollar/Swiss franc)

And the three commodity pairs:

AUD/USD (Australian dollar/dollar)

USD/CAD (dollar/Canadian dollar)

NZD/USD (New Zealand dollar/dollar)


What does this mean for people looking to trade Forex? Well, with the vast majority of activity focused on just a few pairs, it means trading Forex trading is a lot more concentrated than the stock markets.
According to the European Central Bank's Triennial Survey in 2010, the euro was the second most actively traded currency, accounting for 39% of all foreign exchange transactions. Needless to say, the most actively traded currency was the US dollar with an 85% market share.
The Japanese yen was next with 19%, and pound sterling was fourth with 13%. (The total market share adds up to 200% as there are always two currencies involved.)
The US dollar was also the most traded currency in the euro area, being involved in 80% of foreign exchange transactions.

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