Forex currencies: Popular currency names and the major pairs. Now that you are here, you must have known the advantage of entering foreign exchange market. Popular as the most fluid financial market nowadays, foreign exchange or Forex in short has been able to attract a lot of new traders to compete in the market. If you are one of them who learn Forex as new trader, this article will help you with the basic.
What Currencies Are Traded in the Forex Market?
Basically, all the currencies available around the world are included in the Forex market. However, the primary of trades includes no more than 15 currencies with only four currencies are utilized in around 77 percent of the entire trades. Remember that Forex always engages two currencies with one currency are bought in exchange for another one. Together these two are called currency pair.
#1 About Currency Pair
Two currencies are constantly involved in a foreign exchange trade. The two currencies are usually symbolized by two three-letter abbreviation of currency. The three letter currency code used in the Forex market refers to the national currency unit which is based on the ISO 4217 standard. At this point, the first two letters indicates the country while the third one refers to the currency name.
For instance, when it comes to the dollar of US, the code is USD. On the other hand the Australian dollar is shorten into AUD. When it comes to the currency pair, there will be two units of currency in one pair. For example, there is USD/AUD. The first currency (USD) here is the currency being purchased while the second (AUD) is being sold.
#2 The Most Popular Currencies Traded
Then, which are the most traded currencies in the Forex market? The currencies in question include the Euro (EUR), the US Dollar (USD), the Great Britain Pound (GBP), the Japanese Yen (JPY), the New Zealand Dollar (NZD), the Swiss Franc (CHF), the Canadian Dollar (CAD), plus the Australian Dollar (AUD). Among these currencies, USD, JPY, EUR and GBP are mostly used in all trades.
The Top Three Major Currency Pairs
When there is some popular currency units traded in market, there are three major currency pairs to know when you learn Forex. When you are trading Forex for the first time, it can be a good idea to trade on these popular major currency pairs instead of exotic currency pairs. And here are the top three major currency pairs that we are talking about.
1. The USD/EUR
A USD/EUR is known as the most popular currency pair traded in the Forex market. With all other items being equivalent, a faster-growing economy of the United States reinforces the dollar against European Euro. On the other hand, the faster-growing economy of the European Union also strengthens its currency against the US dollar. It makes this currency pair the most liquid in the market.
2. The USD/JPY
Moreover, there is also USD/JPY which becomes a major currency pair available right now. This currency pair is known to feature low-ask spreads as well as great liquidity which make it an interested pair to trade. For your information, this currency pair is perfect for you who have just started Forex trading as well as those who have been experienced in the Forex market.
3. The USD/GBP
The last, we also have the GBP/USD as another most liquid currency pair in the Forex market. This currency pair offers tight bid-ask spreads as well as arbitrage changes which are doubtful to exist. Nevertheless, the liquidity of this pair which is then merged with the accessibility of trading instrument makes this currency pair a nice choice for currency traders of any type.