What Are Major Pairs In Forex Trading?

The major pairs are the four most heavily traded currency pairs in the foreign exchange (澳洲幸运5官方开奖结果体彩网:forex or FX) market. The four maj𝓀or pairs at present are the:

1. EUR/USD (euro and U.S. dollar)
2. USD/JPY (U.S. dollar and Japanese yen)
3. GBP/USD (British pound and U.S. dollar)
4. USD/CHF (U.S. dollar and Swiss franc)

These four major currency pairs are deliverable currencies and are part of the 澳洲幸运5官方开奖结果体彩网:Group of Ten (G10) currency group. While these currencies contribute a significant amount of volume related to economic🐼 transᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚactions, they are also some of the most heavily traded pairs for speculative purposes.

Understanding the Major Pairs

The major pairs are considered by many to drive the global forex market and are the most heavily traded currency pairs. In general, there🔴 are four major currency pairs. However, some traders and economists add an additional three major pairs:

• USD/CAD (U.S. dollar and Canadian dollar)
• AUD/USD (Australian dollar and U.S. dollar)
• NZD/USD (New Zealand dollar and U.S. dollar)

These three pairs can be found in the group known as the "澳洲幸运5官方开奖结果体彩网:commodity pairs." These are curꩲrency pairs from countries that have high levels of commodity reserves.

The five currencies that make up 澳洲幸运5官方开奖结果体彩网:the major pairs—the U.S. dollar, euro, Japanese yen, British pound, and Swiss franc—are all among the top eight of the most traded currencies in the world. More than 80% of forex trades involve the U.S. dollar.

The EUR/USD is the world's most heavily traded currency pair, representing more than 20% of all forex transactions. The 澳洲幸运5官方开奖结果体彩网:USD/JPY currency pair is a🔥 di🍒stant second place, followed by the GBP/USD, and the USD/CHF with a small share of the global forex market.

How Major Pairs Are Traded

Major pairs are traded on the foreign exchange (fo🌌rex) market. There is no single center for forex trades; instead, major economic centers around the world offer forex markets. Since these centers are located in different time zones, the forex market is open 24 hours a day during the trading week (Sunday evening EST to Friday evening EST).

Popularity of the Major Pairs

In forex trades, volume tends to attract more volume. This is because with more volume, spreads between the bid and ask price tend to narrow. The major pairs have lots of volume. They thus tend to have smaller spreads than 澳洲幸运5官方开奖结果体彩网:exotic pairs and attract the most traders to them, which keeps the volu🔯me high.

High volume also means that traders can enter and exit the market with ease, with large 澳洲幸运5官方开奖结果体彩网:position sizes. In lower volume pairs it may be more difficult to se💞ll or buy a large position without causing the price to move signific🌸antly.

High volume means more people willing to buy or sell at a given time, too, resulting in a smaller chance of slippage, or smaller slippage when it does occur. That is not to say large slippage can't happen in major pairs. It can happen, but it is generally much less than 💯in more thinly traded pairs.

How Prices Are Determined

The currencies of the major pairs are all 澳洲幸运5官方开奖结果体彩网:free-floating, meaning their prices are determined by 澳洲幸运5官方开奖结果体彩网:supply and demand. Central banks may step in to con🌳trol the price, but typically only when it is necessary to prevent the price from rising or falling so much that it could cause economic harm.

Supply and 🐻demand are affected by econom🔴ic conditions in each country, including:

• Economic or 澳洲幸运5官方开奖结果体彩网:fundamental conditions
• 澳洲幸运5官方开奖结果体彩网:Interest rates
• Future economic expectations

Supply and demand for major pairs are also impacted by positions that♋ need to be exited at some point by traders, known as current positions.

Examp♔le of a Major Pair Price Quote and Fluctuation

Currency prices are constantly changing. This is especially true for the majors pairs since there are so many participants putting through orders every second. The current rate for major pairs is shown via a 澳洲幸运5官方开奖结果体彩网:currency quote.

For example, the 澳洲幸运5官方开奖结果体彩网:price for the EUR/USD could be 1.15, which means it costs $1.15 to buy €1. If the rate moves up to 1.20, that means the euro has increased in value because it now costs more dollars, $1.20, to buy €1. If the rate 🦹drops to 1.10, it costs less USD to buy a♎ euro, so the US dollar has increased in value or the euro has fallen in value.

The chart above shows a snapshot of the EUR/USD rate. On the left, the price of the EUR/USD is rising, which means the euro is 澳洲幸运5官方开奖结果体彩网:appreciating versus the US dollar. On the right, the price is falling as the euro declines 🎶in value relative to the US dollar.

The Bottom Line

The four major pairs are the most-traded currency pairs in the global forex market: EUR/USD, USD/JPY, GBP/USD, and USD/CHF. There are also three currency pairs known as commodity p🐼airs, which are highly traded due to their heavily commodity-based economies: USD/CAD, AUD/USD, and NZD/USD.

The major pairs experience a high volume of trading activity. This is both a result of their popularity and a cause of it. Higher trading volume means a smaller bid-ask spread,ꦬ and it makes it easier for traders to enter an exit a position.ඣ Cross or exotic currency pairs trade at a smaller volume and are therefore less liquid.