34. Forex Currency Pairs

Forex market is all about currencies and currency pairs. It is about buying one currency and simultaneously selling another. Whether you are a new trader or an experienced trader, if you have good understanding of which currencies are referred to by the currency pairs, it will help you streamline your trading decisions.

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Forex traders sometimes refer to currency pairs by their nicknames. Here are the nicknames of the major currencies which you would like to know.

article34_2Currency pairs which are traded in Forex are broadly categorized into two groups based on their liquidity:

Major Currency pairs

Major currencies are the ones which are most liquid. Almost 85% of the Forex market is based on these major currencies. Major currency pairs are formed when any of the major currencies pair with US Dollar (USD). Examples of major currency pairs:

  • EUR/USD
  • USD/JPY
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • USD/CAD

Minor Currency pairs

Minor Currency pairs are those which are not traded as much as Major currency pairs, i.e. the less liquid ones form the Minor Currency pairs. These are mostly currency pairs which don’t include USD as one of the currency in them. These are also known as cross currency pairs. A few of the minor currency pairs are as listed below:

  • EUR/GBP
  • EUR/AUD
  • GBP/AUD
  • GBP/JPY
  • CAD/JPY
  • GBP/CHF
  • GBP/CAD

Another group of currency pairs is known as Exotic Currency Pairs, which are neither minor nor major. These are currency pairs which are not that common in the Forex market. Exotic Currency Pairs are composed of major currency and a currency from a developing or emerging nation. These currency pairs are not as liquid as the major or minor currency pairs. Here is a list of a few of the Exotic Currency Pairs:

  • USD/HKD – US Dollar/Hong Kong Dollar
  • USD/SGD – US Dollar/Singapore Dollar
  • EUR/ TRY – Euro/Turkish Lira
  • USD/TRY – US Dollar/Turkish Lira

Experienced traders recommend that new traders should start with minors or majors and not exotic currency pairs as they don’t have enough liquidity in the market. So, now you know about currency pairs and their classifications. That was pretty quick. There are a lot of countries and hence a lot of currencies to choose from when trading Forex. Make sure you understand the currencies and the economies before placing a trade on a particular currency pair.

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