Important currency pairs in the overview

 

Important currency pairs in the overview

Name Currency pair
EUR/USD euro/US Dollar
GBP/USD British pound/US dollar
AUD/USD Australian dollar/US dollar
USD/JPY US dollar/Japanese yen
USD/CHF US-dollar/Swiss franc
USD/CAD US dollar/Canadian dollar
NZD/USD New Zealand dollar/US dollar

 

The overview of currency pairs shows that the US dollar remains the world’s leading currency. The most important currency pairs (also called majors) are traded against the dollar as a base or counter currency. In forex trading, it should be noted that some of the majors tend to be in the same direction, such as the pairs EUR/USD and GBP/USD as well as AUD/USD and NZD/USD.

Major CURRENCIES:

EUR, in €
JPY, in yen
GBP, in Pounds
USD, in $
CAD, in Canadian $
CHF, in Swiss francs F
AUD, in Australian $
When trading Forex currency pairs, major and minor currency pairs are differentiated. Minor currency pairs are better known as exotics. In forex trading, major pairs and minor pairs or cross variants can be traded.

Exotic currency Pairs

The “exotics” among the currency pairs are usually not traded against the leading currency US dollars. In addition to the dollar, the euro and Japanese yen are the most important currencies in the foreign exchange market, as they are often held as currency reserves by different nations. Therefore, several euro-and yen-pairs are traded with high sales, including EUR/GBP, EUR/JPY, GBP/JPY or EUR/CHF. In contrast, exotic currency combinations may be more difficult or risky due to the much lower liquidity. These include the pairs GBP/CHF, CAD/CHF or AUD/NZD.

The observation of the exotics can however be useful to gain from analyzing the relative strength insights for the trading of the majors. For example, if you want to buy AUD/USD or NZD/USD, you may find it worthwhile to look at AUD/NZD’s chart. Should AUD/NZD just break out of a sideways movement as the Australian dollar falls in comparison to the New Zealand dollar, then NZD/USD is the better buy due to relative strength compared to AUD/USD.

Source: alpari.de, AUD/NZD, 2014.12.16 09:48 UTC, Alpari UK Ltd., with the MetaTrader 4, real
Source: alpari.de, AUD/NZD, 2014.12.16 09:48 UTC, Alpari UK Ltd., with the MetaTrader 4, real
Compared to the possible gains from trading with majors, the profits with minors usually fall significantly lower. An advantage in trading with exotics lies in the relatively well calculable currency stability. Exceptions can be found in the crisis (2014) around Ukraine and the resulting decline in the value of the Russian ruble. Minors are especially worthwhile to draw conclusions on major currency pairs. Exotic currency pairs are known as exotic currency pairs.

Tips for trading Forex currency pairs

Trading in Forex currency pairs is due to the demand of the currencies traded. Traders ultimately earn the price difference in the currencies they demand. The trader currently has 160 currencies and the resulting forex currency pairs are available. Since not every couple is meaningfully tradable at all times, Forex trading also depends on the pursuit of market events.
Long-term changes in a currency are easier to track and result from, for example, political decisions or economic partnerships. On the other hand, the prediction and purchase or sale of short-term fluctuations of certain exchange rates is different. Short-term changes in the exchange rate result from the current demand of the countries for foreign exchange, current trading transactions and speculative trading.
For traders with high risk appetite, both majors and minors with predictable price fluctuations are lucrative trading products.

Trading with majors is suitable for newbies of forex trading. It usually takes place at low spreads, such as the major EUR/UDs, which is usually traded at 1 PIP. The trade in exotics should only take place after a certain amount of experience. Newcomers can learn more about the Forex function and the opening of a forex demo account, learning to analyze economic data on the basis of charts and making first trade decisions with for.

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