Today’s discussion is centered on Currency Pairs in Forex.

If you’re new to Forex trading, one of the first things you will encounter is the concept of currency pairs — two currencies traded against each other.

Every Forex trade involves buying one currency and selling another.

But did you know that not all currency pairs are equal?

Bring your popcorn along as I break it down for you.

Currency Pairs and Their Categories

A currency pair represents the value of one currency quoted against another.

Unlike in crypto, in Forex, you’re always trading one currency against another.

That’s called a currency pair.

For example: EUR/USD = Euro vs. US Dollar

The first currency is called the base currency, and the second is the quote currency.

So if EUR/USD is 1.10, that means 1 euro = 1.10 dollars.

When you buy this pair, you’re expecting the euro to go up.

When you sell, you’re expecting the euro to go down.

Currency pairs are grouped into three categories:

• Major Pairs
• Minor Pairs (Crosses)
• Exotic Pairs

Each group behaves differently in terms of liquidity, spread, and volatility.

Let me break them down with examples to help you understand which to trade and when.

1. Major Currency Pairs

These are the most traded pairs in the Forex market.

They are made up of currencies from the world’s top 7 economies, always paired with the U.S. Dollar (USD).

Examples of Major Pairs:

• EUR/USD – Euro vs. US Dollar
• GBP/USD – Great British Pound vs. US Dollar
• USD/JPY – US Dollar vs. Japanese Yen
• USD/CHF – US Dollar vs. Swiss Franc
• AUD/USD – Australian Dollar vs. US Dollar
• USD/CAD – US Dollar vs. Canadian Dollar
• NZD/USD – New Zealand Dollar vs. US Dollar

Nota Bene: Currency pair notation is standardized. For instance, it’s always USD/JPY, never JPY/USD.

Key Features of Major Pairs:

• Highest liquidity
• Tight spreads
• Lower slippage
• Most beginner-friendly
• Account for 70–75% of total Forex volume

If you’re just starting out, major pairs are the best place to learn and practice your strategies.

2. Minor Currency Pairs (Cross Currency Pairs)

They are also called Crosses.

Minor currency pairs involve major world currencies, excluding the U.S. Dollar.

These pairs still offer good trading opportunities, though they’re slightly less liquid than majors.

Examples of Minor Pairs:

• EUR/GBP – Euro vs. British Pound
• GBP/JPY – British Pound vs. Japanese Yen
• EUR/AUD – Euro vs. Australian Dollar
• CHF/JPY – Swiss Franc vs. Japanese Yen
• EUR/NZD – Euro vs. New Zealand Dollar
• AUD/CHF – Australian Dollar vs. Swiss Franc
• CAD/JPY – Canadian Dollar vs. Japanese Yen
• EUR/JPY – Euro vs. Japanese Yen
• EUR/CHF – Euro vs. Swiss Franc
• EUR/CAD – Euro vs. Canadian Dollar
• GBP/CHF – British Pound vs. Swiss Franc
• GBP/AUD – British Pound vs. Australian Dollar
• GBP/NZD – British Pound vs. New Zealand Dollar
• GBP/CAD – British Pound vs. Canadian Dollar
• AUD/JPY – Australian Dollar vs. Japanese Yen
• AUD/NZD – Australian Dollar vs. New Zealand Dollar
• AUD/CAD – Australian Dollar vs. Canadian Dollar
• NZD/JPY – New Zealand Dollar vs. Japanese Yen
• NZD/CHF – New Zealand Dollar vs. Swiss Franc
• NZD/CAD – New Zealand Dollar vs. Canadian Dollar
• NZD/AUD – New Zealand Dollar vs. Australian Dollar
• NZD/GBP – New Zealand Dollar vs. British Pound
• CAD/CHF – Canadian Dollar vs. Swiss Franc

Key Features of Minor Pairs

• Lower liquidity
• Higher spread
• Increased volatility
• Regional economic influence

3. Exotic Currency Pairs

Exotic pairs combine a major currency with a currency from an emerging or developing economy.

These can be tempting due to their high volatility and profit potential, but also carry greater risk.

Examples of Exotic Pairs:

• USD/ZAR – US Dollar vs. South African Rand
• USD/TRY – US Dollar vs. Turkish Lira
• USD/NGN – US Dollar vs. Nigerian Naira
• EUR/SEK – Euro vs. Swedish Krona

Key Features of Exotic Pairs:

• Low liquidity
• High spreads and slippage
• Unpredictable price spikes
• Make up less than 10% of the total Forex volume

Pro Tip: As a beginner, it is safer to avoid exotic pairs until you’ve gained more experience. They can be highly volatile and harder to analyze.

Final Thoughts

Choosing the right currency pairs is a key step in building a successful Forex trading strategy.

Start with major pairs to build your confidence and skills, then explore minors.

Steer clear of exotic pairs until you’re well-versed in risk management and volatility handling.

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Happy trading! 💹