Currency trading and its 7 pairs

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Did you know that just 7 currency pairs account for around 75% of all forex trades? In fact, given how these 7 major currency pairs relate to each other, they alone play a very important role; a role that some marketers sometimes don’t understand.

While some currency pairs are safe havens, others will have correlations with milk or iron ore and coal prices.

The intricacies of the forex market are often complex, but that’s why so many traders love currency trading and what makes it so incredibly rewarding.

As such, let’s take a look at the 7 best currency pairs, how they shape trading sessions around the world, and how they can turn yours into a profitable forex trading experience.

EUR/USD

When you combine the Euro with the US Dollar, given that they come from two of the most powerful economies in the world, unsurprisingly, you get the most traded currency pair.

This currency pair is well known for its high liquidity and incredibly large trading volumes, which is why it is widely considered the favored territory of forex scalpers.

The stability of EUR/USD ensures that gains are frequent although a bit smaller than when trading other currency pairs.

GBP/USD

While EUR/USD is the most popular trading pair, GBP/USD is called the “cable” (the forerunner of fiber optic cable), but that certainly doesn’t mean the currency pair has in any way lost its importance.

In fact, the GBP/USD tends to be considered a highly volatile pair given the frequency of price fluctuations, pip movements and exchange rates, which means technical analysis is a must for those wish to venture there.

As a result, given these price swings, GBP/USD is generally challenged by day traders and swing traders.

EUR/GBP

Commonly referred to as the “Chunnel” (like channel + tunnel connecting them geographically), the EUR/GBP was widely considered a strong pair due to the interconnectedness of the two regions in terms of trade and often politics.

However, Brexit has shaken things up and the currency pair is now experiencing more volatility, which means a higher level of skill is needed to trade it, so don’t forget to bring your technical analysis to a game for this one.

USD/JPY

Given the importance of the Japanese yen in Asia, this currency pair is one of the most popular in the world.

USD/JPY is known for its high liquidity, which means that large volumes will not affect the price too much in terms of exchange rates.

Additionally, the spreads are generally considered to be the tightest in the market, which means transaction costs tend to be low.

USD/CHF

This currency pair is known to be a bastion of financial stability, a safe haven for investors, which is why it has earned the endearing term: the “Swissie”.

Traders tend to flock to the Swiss Franc during times of high volatility, which means that in times of political or economic turmoil or uncertainty, you are likely to see USD/CHF become an increasingly popular choice among traders.

On the other hand, the stability of USD/CHF also means that once the markets hit low volatility, you won’t see much action happening here.

AUD/USD

Known as the “Aussie”, AUD/USD is known for its negative correlation with USD/CHF and USD/JPY.

Australia is a massive exporter of coal and iron ore, meaning its economy is heavily dependent on commodity trading.

As a result, you will find that the price of the Australian Dollar will be highly dependent on commodity prices, so keep an eye out for those if you plan to trade this one.

USD/USD

As long as we’re looking at the economy from below, let’s move on to New Zealand.

This currency pair is known as the “Kiwi” and just as Australia depends on commodities, much of New Zealand’s strength comes from its tourism industry and dairy industry.

This means that to trade NZD, you may need to watch milk prices closely, as New Zealand is the largest exporter of milk (and it’s not even close). As a result, if milk is up, the NZD is likely to continue this upward price action.

USD/CAD

Commonly referred to as the “Loonie,” USD/CAD sees itself as extremely dependent on commodity prices.

Canada’s economy is based on natural gas, oil reserves and timber.

Given the geographic proximity of the United States and Canada, their trading volume and shared rates are two things to watch closely when trading this currency pair.

Recap: The Benefits of Trading “Major 7” Currency Pairs

It’s one thing to understand how currency trading works, but it takes time to fully understand how currency pairs work.

When trading the major 7, you are bound to encounter large trading volumes, so if you use the right forex trading platforms, you will get tighter spreads, meaning you can enter or exit a position at any time. moment.

Plus, their added versatility means they can be traded anytime, night or day, so you can trade on your schedule.

And for those who have never engaged in any form of currency trading, no two pairs are the same but with the major 7 you can at least count on stability which means there is little chance that you encounter sudden fluctuations.

Currency in Forex moves in fascinating ways, and if you want to understand it, all you have to do is look in the right places.

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