Major Currency Pairs Traded in the Market and Minor/Crosses

The currency pairings you can trade online are sorted into two groups, based on how much they are traded. Currency pairings that are traded a lot are called Major FX Pairs, and they are the ones most often traded. Then, there are Minor FX Pairs, which are currency pairings that are not traded as much. Major Currency Pairs are more commonly traded than Minor Currency Pairs because they are easier to buy and sell.

The daily market turnover nears $7.2 trillion, with retail traders executing 95 percent of all trading actions for financial gain. The vast majority of these trading positions involve the five primary Forex currencies, which are:

The above forex currency symbols represent currencies of their different countries, using the 3 letter naming format is used to name currencies. This is the format used in Forex when trading these currencies, for those not familiar with currency symbols the above represent the following: USD - US Dollar, EUR - EURO, GBP - Great Britain Pound, JPY - Japanese Yen and CHF - Swiss Franc.

The USD is the most traded currency

USD - 85 % of all the daily trading transactions

EUR - 40% of all trading transactions

JPY - 20% of all trading transactions

GBP - 13 % of all trading transactions

CHF - 9 % of all trading transactions

United States Dollar or USD - the North American dollar is the primary currency globally. It is utilized as the benchmark measure for all other currencies that are exchanged in the marketplace. All other monies are generally stated relative to the US dollar.

The Australian dollar is a safe currency because many central banks keep it as a reserve. When the economy slows down, the US dollar will become stronger because investors buy it as a safe place to put their money. But when the economy is strong, traders will choose currencies that give them better returns, such as the EURO, Pound, Swiss Franc, and Australian Dollar.

On the FX market, the dollar is exchanged with other major currencies, including the Euro, Japanese Yen, British Pound, and Swiss Franc.

The Euro or EUR has a big impact around the world because it stands for 17 countries in the EU Zone that are part of the EuroZone Monetary Union. Because the Euro stands for 17 economies, it is the second most traded currency after the US dollar.

The Japanese Yen (JPY) is the world's third most frequently traded currency due to its high liquidity. Japan's national economy stands as the second largest globally, trailing only the United States economy.

British Pound or GBP – The economy of Great Britain ranks as the third largest globally, trailing only the US and Japan. This economic stature contributes to the British Pound's high liquidity, making it the fourth most actively traded currency in the market.

Swiss Franc, or CHF, stands out as the main currency from a big European nation. It skips the European Monetary Union and the G7 group. The Swiss economy ranks small. Still, the CHF counts among the top five forex currencies. The strong Swiss banks and economy keep it steady. Demand for it outpaces supply.

The Canadian Dollar (CAD) and the Australian Dollar (AUD) are also among the currencies exchanged in the market: however, due to relatively lower liquidity, they are not classified as belonging to the major currency pairs.

After classifying the currencies, there are two categories:

Major Forex Pairs
Currency Crosses - Minor Currency Pairs

Major Forex Pairs

Currencies are traded and transacted in pairs of two e.g. EUR USD

Major currency pairings consist of the USD paired against one of the other principal currencies (EUR, JPY, GBP, or CHF).

The 4 major currency pairs or the big four in fx are:

EUR USD
USD JPY
GBP/USD
USD/CHF

These are the most traded currency pairs because they have a high turnover and are the most profitable.

These four main pairs work best for day trades. Stick to them to grab the most gains.

Daily Turnover of Forex Currencies by Volumes

USD is the most transacted currency on the market, followed by EUR, GBP, JPY & CHF, the daily trade turnover volume taken up by each of the 5 in terms of percent is shown below:

USD - 85 %

EUR - 40 %

JPY - 20 %

GBP - 13 %

CHF - 9 %

Since Forex trading transactions are in pairs the total will be 200 %

For explanatory purposes regarding the EURUSD pricing: EURUSD is composed of 100% EUR plus 100% USD in its structure.

Tallying the aggregate of the four major currency pairs yields: 85 + 40 + 20 + 13 + 9 = 167%. Note that these four currency pairs are composed of 5 distinct individual currencies contributing to this 167% total. This percentage of the overall trade turnover volume is the criterion by which these four currency pairs are classified as major currency pairs, often abbreviated as "majors." This substantial portion of the daily forex trading volume is also what designates these 4 currency pairs as the optimal choices for trading, particularly among Day Traders.

Therefore volume for Major Currencies is:

Forex Major Currency Pairs = 167 % of all trading turnover

Other Forex Pairs Combined = 33 % of all trading turnover

Premier Foreign Exchange Pairs for Trading: Given that major currencies see the highest trading activity in the digital marketplace, many seasoned investors restrict their trading solely to these major currency pairs due to their high liquidity and the relative predictability of their price movements. This high liquidity makes the primary currencies - USD, EUR, GBP, JPY, and CHF - the prime candidates for effective technical analysis and interpretation.

The greater the liquidity, the more the volatility, volatility means a currency is likely to trend in one particular direction and when the prices are moving in a given direction in a trend it is easier to make money as compared to when prices aren't heading in a given direction - range market.

Other currency pairs, known as minor pairs, make up 33% of daily trade volume. They lack liquidity, so they show low volatility. Their prices often move in a choppy or sideways way. This makes minor pairs tough to study with trading tools. They rarely follow a clear trend.

For example by just forex trading EURUSD then one will be participating on 85 + 40 = 125% of all trading turnover volume, which is two-thirds of all trade positions. This is another reason why some traders just stick to trading the EURUSD currency pair alone.

Currency Crosses

These currency pairs do not include the USD and involve cross-currency transactions.

Example:

EUR JPY
GBP JPY
EUR GBP
AUD/JPY
GBP CHF
EUR CHF
CHF JPY

To buy EURJPY you first buy EURUSD & then buy USD JPY.

This means that to buy EURJPY in forex, you'll have done two other major currency pair deals. This is why the major currency pairs have big forex trading amounts because forex deals of all smaller currency pairs will use these two major currency pairs.

This necessary conversion occurs because you cannot directly exchange EUR for JPY: instead, the EUR must first be converted to USD, and then the USD is used to acquire JPY. This intermediary role of the USD creates what are known as "crosses" due to the transaction passing through USD positions. This is also why USD dominates approximately 85% of all transactions, as it serves as the fundamental currency in nearly all foreign exchange transfers.

To buy GBPJPY you first buy GBPUSD and then buy USD JPY

Currency crosses have wider spreads than major pairs. You handle two trades at once when buying or selling them.

Currency crosses don't change hands as often either, so most investors and traders don't use them much: this is why these less common currency pairs tend to have less steady price changes because there isn't as much buying and selling activity.

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