FX trading allows traders to speculate on all the major currency pairs. The only limit to which currency pairs can be traded are the pairs and quantity offered by the trading platform individual traders choose. This page covers some of the major currency pairs traded worldwide, such as EUR/USD, USD/JPY and GBP/USD. Keep reading to view live prices for the major forex pairs, and to learn what factors that impact their price movements. In addition to all major forex pairs, OANDA’s trading platform also provides our clients with the ability to trade in cross currency pairs.

Bid and ask price

‘Commodity currencies’ and ‘cross pairs’ are also categorized as majors. The final two currency pairs are known as commodity currencies because both Canada and Australia are rich in commodities and both countries are affected by their prices. The major currency pairs tend to have the most liquid markets and trade 24 hours a day Monday through Thursday. The currency markets open on Sunday night and close on Friday at 5 p.m. A trade in forex has two sides—someone is buying one currency in the pair, while someone else is selling the other.

Base currency

The GBP/USD tends to have a negative correlation with the USD/CHF and a positive correlation with the EUR/USD. This is due to the positive correlation between the British pound sterling, the Swiss franc, and the euro. The European Union’s Euro currency does not have any particularly common nicknames so is just called the “Euro”. Its plural form could be “Euro” or “Euros” since it is a relatively recent currency name, and its plural has apparently not yet been standardized. Similarly, the Japanese Yen is referred to simply as the “Yen”, which is a plural term. The Canadian, Australian and New Zealand Dollars are commonly called the “Loonie”, “Aussie” and “Kiwi”, which are all plural nicknames.

• It provides a qualitative understanding of the underlying factors influencing a currency pair.
• The relative strength or weakness of the two currencies involved is shown in each pair.
• This ease of buying and selling makes major currency pairs the most liquid currency pairs in the world.
• Currency pairs are the national currencies from two countries coupled for trading on the foreign exchange (FX) marketplace.
• Some online forex providers typically quote no more than a fixed 1-point spread between the bid and offer on major forex pairs, and liquid cross rates in normal market conditions.

How Do You Get Started Trading Forex?

Forex traders bet that one currency’s value will appreciate or depreciate against another currency. For example, assume that you purchase U.S. dollars and sell euros. In this case, you are betting that the value of the dollar will increase against the euro. The total amount of currency trading involving these 18 pairs represents the majority of the trading volume in the FX market.

On the left, the price of the EUR/USD is rising, which means the euro is appreciating versus the US dollar. On the right, the price is falling as the euro declines in value relative to the US dollar. More than half of trades in the forex market involve the U.S. dollar. For example, a political scandal or unexpected election results can cause an exotic pair’s exchange rate to swing violently. These pairs all contain the U.S. dollar (USD) on one side and are the most frequently traded. Politics – Trade wars, elections, corruption scandals and changes in policies introduce instability which reflects in the forex market.

Currency Pair Volatility

Higher volatility may lead to wider price swings, impacting entry and exit points, as well as stop-loss and take-profit levels. Economic indicators impact currency pairs by influencing investor perceptions of a country’s economic health. Factors like interest rates, GDP, employment data, and political stability can cause currency values to rise or fall based on market expectations and reactions to economic conditions. While price fluctuations sound risky, they present huge opportunities for day and swing traders. To use this to your advantage, the best strategy is to assess the risk through indicators to create a plan for position sizing and entry/exit timing. Volatility awareness can also help traders to place stop-loss or take profit orders.

The whole market runs electronically, through a network of banks. The forex market is the most popular financial market, traded by individual retail traders, banks and businesses alike. Learn more about how you can take advantage of forex trading hours.

They do, however, also come with a higher risk because of the potential for price manipulation and increased volatility. If your bet is correct and the value of Forex pairs the dollar increases, you will make a profit. Trading forex is all about making money on winning bets and cutting losses when the market goes the other way.

Due to the overall lower degree of liquidity, exotic currency pairs tend to be far more sensitive to economic and geopolitical events. While there are EIGHT major currencies, there are only SEVEN major currency pairs. Crosses that involve any of the major currencies are also known as ” minors”.

The AUD/USD (Australian Dollar/US Dollar), or ‘Aussie’, is greatly affected by mining commodities, farming of beef, wool and wheat. The Aussie also tends to do well when China does well because the two countries are big trading partners. The Reserve Bank of Australia (RBA) also has major influence over the AUD/USD.

As a result, traders have a higher profit margin than they would have when trading other currency pairs, like exotic or minor pairs. A wide spread between currencies indicates volatility, whereas https://investmentsanalysis.info/ a narrow spread means that there is a smaller difference between the bid and ask price. Most traders prefer a tighter or narrower spread, as it indicates lower volatility but high liquidity.

For novice traders, it is essential to study the dynamics of specific currency pairs, their behaviors over time, and their correlation with other pairs. Now, establish clear goals based on your trading capital and risk tolerance. Beginners tend to overestimate their trading skills and set unrealistic goals, which can lead to detrimental results. Minor currency pairs or crosses are pairs that do not include the US dollar. When you trade in forex, each transaction will involve the simultaneous buying of one currency and selling of another in pairs.