The Most Traded Currencies in Forex
Now that a quotation of a Forex pair is clarified, the next step is to get familiar with some of the most traded currencies in the world. The following eight currencies are the commonly traded, as they account for over 85% of the daily traded volume in the Forex market.
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United States dollar (USD),
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Euro (EUR),
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British Pound sterling (GBP),
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Australian dollar (AUD),
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Japanese yen (JPY),
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Swiss franc (CHF),
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Canadian dollar (CAD),
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New Zealand dollar (NZD).
The Most Liquid Forex Pairs
Liquidity is a term in Forex that you will come across often. It basically describes that an asset, security or currency can be bought or sold in a quick manner, whilst not impacting its value or price. The Forex pairs listed below are not necessarily the best FX pairs to trade, but they are the ones that have high liquidity. Also, these Forex pairs are involved in the majority of exchange transactions:
EUR/USD (euro versus U.S. dollar)
USD/JPY (U.S. dollar versus Japanese yen)
GBP/USD (Great Britain pound versus U.S. dollar)
AUD/USD (Australian dollar versus U.S. dollar)
USD/CHF (U.S. dollar versus Swiss franc)
USD/CAD (U.S. dollar versus Canadian dollar)
NZD/USD (New Zealand dollar versus U.S. dollar)
Another interesting note is that the above-mentioned Forex pairs are associated with countries that have greater financial power, but also a high volume of trade conducted globally.
List of Exotic Forex Pairs
Aside from these major pairs there are also special pairs, the so-called exotic currencies. These pairs are characterized by relatively, low trading volumes, high volatility and high spreads. Notably, trading such pairs involves higher degrees of risk as well as higher possible profits. Below is a list of some exotic Forex pairs:
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EUR/TRY (Euro/Turkish Lira)
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USD/TRY (US Dollar/Turkish Lira)
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USD/SEK (US Dollar/Swedish Krona)
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USD/MXN (US Dollar/Mexican Peso)
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USD/NOK (US Dollar/Norwegian Krone)
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USD/ZAR (US Dollar/South African Rand)
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USD/HKD (US Dollar/Hong Kong Dollar)
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USD/DKK (US Dollar/Danish Krone)
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USD/SGD (US Dollar/Singapore Dollar)
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USD/THB (US Dollar/Thailand Baht)
This is list is not complete, as there are more exotic Forex pairs. The point is that trading these exotic pairs isn’t for everyone. Trading these currencies require endurance, an additional knowledge of geopolitical and economic impacts. Therefore, many new traders start to trade with more stable Forex pairs that have high liquidity, such as EUR/USD, GBP/USD and the other Forex pairs mentioned in the sub-chapter “The Most Liquid Forex Pairs”.
