Which Currency Pairs are the Most Traded in Forex Trading?
Which are Major Forex Currency Pairs? - Which Currency Pairs are the Most Traded in Forex?
Major currency pairs are the currency pairs that are the most traded currency pairs by volume of trade transactions - these currency pairs are: EURUSD, USDJPY, GBPUSD and USDCHF.
Currencies are traded in pairs of two e.g. EURUSD
Major currency pairs have a combination of the USD and one other major(EUR, JPY, GBP, CHF).
The 4 major currency pairs or the big four in Forex are:
- EURUSD
- USDJPY
- GBPUSD
- USDCHF
These major currency pairs are the most traded because they have a high trade turnover and are the most profitable.
These major currency pairs are the best pairs for forex day trading, if you want to make the most profit it is best to forex trade only these four major currency pairs only.
Daily Forex Turnover of Major Currency Pairs by Volumes
The USD is the most traded currency in the forex market, followed by EUR, GBP, JPY and CHF, the daily trading turnover volume share taken by each of these 5 forex currencies 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 example the EURUSD pair: EURUSD = 100% EUR + 100% USD
Summing up the total of the big four major currency pairs = 85 + 40 + 20 + 13 + 9 = 167 % . Note these four currency pairs are made up of five individual currencies which make up the sum total of 167%.
- EURUSD
- USDJPY
- GBPUSD
- USDCHF
This percentage of the total forex trade transaction turnover volume is what makes these four major currency pairs to be referred to as major currency pairs or in short "majors".
This lion share of the total turnover daily trading volume is also what makes these 4 the best currency pairs to trade especially among the Forex Day Traders.
Therefore volume for Major Forex Currency Pairs is:
Forex Major Pairs = 167 % of all turnover
Other Forex Pairs Combined = 33 % of all turnover
Best Currency Pairs to Trade: Because the major currency pairs are the most actively traded currency pairs, many experienced forex traders only trade the major currency pairs because these are highly liquid and their movement tends to be more predictable. This makes these major currencies; USD, EUR, GBP, JPY and CHF the best to analyze using technical analysis as they are the most liquid.
The more the liquidity, the more the volatility, volatility means a currency is likely to move in a trend in one particular direction and when the prices are moving in a particular direction it is easier to make money as opposed to when prices are not moving in a particular direction - ranging market.
On the other hand, all the other currency pairs, also known as minor currency pairs or currency crosses only make 33% of all daily trade transactions turnover and are said to be illiquid, meaning they do not have a lot of volatility and as such most of their price movements are choppy or range bound. These means that the minors are the most hard to analyze using technical analysis studies because they do not show defined market trend movements in one particular direction (they do not move in a trend).
For Example by just trading EURUSD then a trader will be participating on 85 + 40 = 125% of all forex trade transaction turnover volume, which is two-thirds of all forex trade transactions. This is another reason why some forex traders just stick to the EURUSD alone.
