Which Currency Pairs are the Most Traded in Forex Trading?
Which are Major 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 & 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 day trading, if you want to make the most profit it is best to trade only these four major currency pairs only.
Daily Turnover of Major Currency Pairs by Volumes
The USD is the most traded currency in the market, followed by EUR, GBP, JPY & CHF, the daily turnover volume share taken by each of these 5 currencies in terms of percent is shown below:
USD - 85%
EUR - 40%
JPY - 20%
GBP - 13 %
CHF - 9 %
Since 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 forex 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 trade turnover volume is what makes these four major forex pairs to be referred to as major forex pairs or in short "majors".
This lion share of the total turnover daily volume is also what makes these 4 the best currency pairs to trade especially among the Day Traders.
Therefore volume for Major Currency Pairs is:
Forex Major Pairs = 167 % of all turnover
Other Pairs Combined = 33 % of all turnover
Best Currency Pairs to Trade: Because the major currency pairs are the most actively traded forex pairs, many experienced 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 & CHF the best to analyze using technical analysis as they're 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 prices are moving in a particular direction it is easier to make money as opposed to when the prices are not moving in a particular direction - ranging market.
On the other hand, all the other currency pairs, also known as minor forex pairs or currency crosses only make 33% of all daily trade transactions turnover & 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 trade transaction turnover volume, which is two-thirds of all trades. This is another reason why some traders just stick to the EURUSD alone.
