Nevertheless, in most cases, these general categories describe currency pairs that respectively tend to be very liquid, quite liquid or relatively illiquid.
In practice, forex market liquidity tends to be a function of the number of market markers available to make quotations for a particular currency pair and their readiness to absorb large transactions without moving the exchange rate much. The next lower tier of liquidity is shared by the minor currency pairs, which include the so-called cross currency exchange rates that do not involve the U.
Traders of cross currency pairs typically experience less liquid trading conditions and wider spreads than those enjoyed for the forex major pairs. Cross exchange rates can be derived from the more liquid markets of their component currencies quoted versus the U. Highly liquid examples of cross currency pairs that do not involve the U. Relatively illiquid markets exist for the least liquid tier of currency pairs commonly known as the exotic currency pairs, and dealing spreads can be considerably wider for these pairs as a result.
Exotic currency pairs typically consist of the currency of a smaller or emerging economy paired as the counter currency with a major currency like the U. Dollar or Euro that acts as the base currency. Those new to trading forex often ask seasoned traders what the best forex pairs to trade are. For example, a trader using a scalping strategy that has a short average trade duration will usually be looking for the best dealing spreads and the ability to trade significant amounts very quickly.
These popular forex pairs feature the tightest dealing spreads and their markets can handle very large amounts due to the significant number of well capitalized market makers and other participants. On the other end of the trading spectrum, a longer term trend trader who sees an excellent directional opportunity arising in an exotic currency pair might do very well by investing some of their account capital in taking a trade in that pair consistent with their market view. Nevertheless, due to the illiquidity of many of the exotic currency pair markets, they may want to keep their position sizes modest and be prepared to trade on wider dealing spreads when entering and exiting their positions.
Which currencies can I trade?
Those trading primarily for time frames somewhere in between those two extremes may find trading opportunities arising in any of the most traded currencies listed in the tables above offered by their forex broker or market maker. Still, if the width of the dealing spread might significantly impact the overall profitability of their trade, then they may wish to focus their trading activities on the forex majors , rather than on the minor or exotic currency pairs.
Professional forex traders tend to be rather colorful individuals, and they often refer to the major currencies and currency pairs by their traditional nicknames. The percentages above are the percent of trades involving that currency regardless of whether it is bought or sold, e.
Bank for International Settlements.
• Most traded currency pairs in forex | Statista
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What are the currency pairs available for forex trading?
United States dollar. Japanese yen. Pound sterling. Australian dollar. Canadian dollar. Swiss franc.
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Hong Kong dollar. New Zealand dollar. Swedish krona. South Korean won. Singapore dollar. Norwegian krone. Mexican peso. Plus uses cookies to improve your browsing experience. You can click accept or continue browsing to consent to cookies usage. Read our Cookie Policy to learn more. Back to Forex. Choose Article. What is Forex?
Most Popular Forex Pairs Some currency pairs are more liquid than others, which in theory makes them easier to trade. Start Trading Now.