Most Popular Currencies In The Forex Market

By definition, trading FOREX is all about working with the world’s entire currency supply. There are some currencies that are staples of the currency world, such as the US Dollar, the British Pound Sterling, the Japanese Yen, the Euro, and the Swiss Franc. Then, there are other important currencies such as the Canadian and Australian Dollar, Chinese Yuan, or the Mexican Peso. 

All of these currencies are freely traded on the FOREX market, meaning that you can buy and sell them according to market prices and available supply. Consequently, you have every opportunity to make as much profit as you can based on your trades.

In the end, making a profit hinges on understanding the dynamics of the various currencies and the interactions. This largely depends on the relationships among countries and the frequency with which these currencies are traded together. Then, there are currencies that aren’t usually traded together. In such cases, you need to be a bit more creative. Nevertheless, you can trade any currency at any time. It’s up to you to do your homework on the best pairings that suit your particular investment strategy.

For example, if you choose to play it safe, then sticking to major currencies is your safest bet. If you are keen on making potentially significant gains, then you might try a road less traveled. This implies trading currencies which may not necessarily be commonly paired. It all boils down to the main objective you have in mind.

However, there is a word of caution here: for the novice investor, it’s best to stick with more common currency pairings. As you gain more experience, you can venture out to other currencies. The important thing is to avoid taking on unnecessary risk at this point in the ballgame.

Major Currency Pairings

In the FOREX market, you’ll find that certain currency pairs dominate the pace of the game. These pairs are called “correlated pairs” as they are commonly traded. Therefore, there is enough information to note that they move in accordance with the price action of each other. When one of the currencies has a significant shift, it directly impacts the other. This is why understanding the nature of these pairings will enable you to make consistent profits. They may not be overwhelming, but they’ll keep the lights on to be sure.

Here are the major currency pairs in the FOREX market today:

  • The EUR/USD pair is the most commonly traded pair on the FOREX market. It accounts for roughly 20% of all transactions. For novice investors, this is the safest place to start. Here, you can find predictable results that will help you make money right from the start. You can copy-cat trades, too. That makes getting started even easier.
  • The USD/JPY is generally regarded as the second-most traded pair. However, it does not account for nearly as much of the trading volume as the USD/EUR pair.
  • The GBP/USD is also regarded as the third-place pair. This pair is generally traded on the European side of the market. Most American investors prefer the Euro.
  • The USD/CHF pair is commonly traded as well though it does not account for nearly as much of the market share as some of the other pairs.
  • Other interesting pairs include the USD/CAD, AUD/USD, and the NZD/USD. The NZD/AUD is also another correlated pair though its market share isn’t nearly as significant as some of the other pairs on this list.

When you are first starting out in the FOREX market, it’s best to stay with the major currency pairs. As we have mentioned earlier, you can get more creative as you gain more experience in the market. That is certainly valid as some unexpected pairings can provide you with the possibility of ample gains. 

However, it’s always best to do your research on these pairs before you take the plunge. While there is a good chance you’ll clean up, there’s also a good chance you’ll fall short. So, do your homework before taking the plunge.