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Currency Pairs

A foreign exchange rate reflects the comparative value between two distinct currencies in the forex market.

What are currency pairs?​

Currency pairs are two currencies traded against each other in the foreign exchange (forex) market. They consist of a base currency and a quote currency. The value of a currency pair shows how much of the quote currency is needed to buy one unit of the base currency. Major pairs involve major economies like EUR/USD, while minor pairs don’t include the US dollar, and exotic pairs include one major currency and one from a developing economy. Traders speculate on currency pair values to profit from exchange rate changes.

Most Traded Currency pairs?

The most traded currency pairs in the forex market are known as the major pairs. These pairs involve currencies from the world’s largest economies and typically have the highest trading volumes. The most traded currency pairs include:

  • EUR/USD (Euro/US Dollar)
  • USD/JPY (US Dollar/Japanese Yen)
  • GBP/USD (British Pound/US Dollar)
  • USD/CHF (US Dollar/Swiss Franc)
  • AUD/USD (Australian Dollar/US Dollar)
  • USD/CAD (US Dollar/Canadian Dollar)
  • NZD/USD (New Zealand Dollar/US Dollar)
These major pairs are highly liquid and widely traded, making them popular choices for traders seeking opportunities in the forex market.

1. EUR/USD

EUR/USD is by far the most traded currency pair, making up 20% of all forex transactions. This is because it involves the two largest economies in the world – the hugely dominant US dollar, and all the countries within the Eurozone.

In terms of forex trading, the extremely high daily volume of EUR/USD transactions means that the currency pair has a lot of liquidity, meaning that it can be bought and sold without too much fluctuation in the price. This means that the spreads are generally quite tight, and orders can be executed faster.

2. USD/JPY

The second-most traded currencies, the US dollar and the Japanese Yen, have significant investment ties and import and export a huge amount of goods between each other. Japan is known for its strong financial sector, and against the dollar, this makes for a strong pairing.

3. GBP/USD

Despite the two currencies fluctuating against each other throughout the turbulent 20th century, the pound and the dollar have a strong relationship. While GBP has always been ahead of the USD in value, the dollar has come close to overtaking GBP a few times, reaching GBP/USD 1.05 in 1985 and GBP/USD 1.08 in 2022.

Minor currency pairs & exotic currencies

Minor currency pairs and exotic currencies are also traded in the forex market, but they typically have lower trading volumes compared to major currency pairs.

Minor Currency Pairs

These pairs do not include the US dollar but involve currencies from major economies. Some examples include:
  • EUR/GBP (Euro/British Pound)
  • EUR/AUD (Euro/Australian Dollar)
  • GBP/JPY (British Pound/Japanese Yen)

Exotic Currency Pairs

Exotic currency pairs involve one major currency and one currency from a smaller or emerging economy. They tend to have less liquidity and higher spreads compared to major pairs. Examples include:
  • USD/TRY (US Dollar/Turkish Lira)
  • USD/ZAR (US Dollar/South African Rand)
  • EUR/TRY (Euro/Turkish Lira)

These pairs can offer opportunities for traders with specific strategies or interests in particular regions or currencies, but they also carry higher risks due to their lower liquidity and potentially wider spreads.

Forex Trading Advantages

Forex trading, or foreign exchange trading, offers several advantages to investors and traders. Some of the key advantages include:
  • High Liquidity : The forex market is the largest financial market in the world, with trillions of dollars traded daily. This high liquidity ensures that traders can enter and exit positions with ease, reducing the risk of price manipulation and slippage.
  • 24-Hour Market : Unlike other financial markets, such as stock exchanges, the forex market operates 24 hours a day, five days a week. This allows traders to participate in trading activities at any time, regardless of their location, providing flexibility and accessibility.
  • Low Transaction Costs : Forex trading typically involves low transaction costs, primarily in the form of spreads (the difference between the bid and ask price). Additionally, many forex brokers offer commission-free trading, making it cost-effective for traders to execute trades.
  • Leverage : Forex trading allows traders to use leverage, which means they can control a larger position size with a relatively small amount of capital. While leverage amplifies both potential profits and losses, it provides traders with the opportunity to increase their exposure to the market without having to invest significant capital upfront.
  • Diverse Trading Opportunities : The forex market offers a wide range of currency pairs to trade, including major, minor, and exotic pairs. This diversity provides traders with numerous trading opportunities across different currencies and market conditions.
  • High Volatility : Forex markets are known for their volatility, which presents opportunities for traders to profit from price fluctuations. Volatility creates trading opportunities in both rising and falling markets, allowing traders to capitalize on short-term price movements.
  • Accessibility : Forex trading platforms are widely accessible, and many brokers offer user-friendly trading interfaces, educational resources, and demo accounts for beginners to practice trading without risking real money. Additionally, the barrier to entry in forex trading is relatively low compared to other financial markets, making it accessible to a wide range of traders.
  • Global Market : The forex market is global and decentralized, with participants from around the world. This provides traders with exposure to various economic, political, and geopolitical events, which can impact currency prices and create trading opportunities.
Overall, forex trading offers advantages such as high liquidity, accessibility, and diverse trading opportunities, making it an attractive market for traders looking to participate in the dynamic world of foreign exchange. However, it’s important for traders to understand the risks involved and to develop a sound trading strategy to navigate the forex market successfully.

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20, Edith Cavell Street, Level 6, Ken Lee Building, Port Louis, Mauritius

+230 260 0342

[email protected]

+230 260 0342

App Store
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ACCOUNTS/PLATFORMS
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Risk statement: An investment in derivatives may mean investors may lose an amount even greater than their original investment. Anyone wishing to invest in any of the products mentioned in www.dizicx.com should seek their own financial or professional advice. Trading of securities, forex, stock market, commodities, options and futures may not be suitable for everyone and involves the risk of losing part or all of your money. Trading in the financial markets has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. Don't invest and trade with money which you can't afford to lose. Forex Trading are not allowed in some countries, before investing your money, make sure whether your country is allowing this or not.

You are strongly advised to obtain independent financial, legal and tax advice before proceeding with any currency or spot metals trade. Nothing in this site should be read or construed as constituting advice on the part of Dizicx Limited or any of its affiliates, directors, officers or employees.

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Risk statement: An investment in derivatives may mean investors may lose an amount even greater than their original investment. Anyone wishing to invest in any of the products mentioned in www.dizicx.com should seek their own financial or professional advice. Trading of securities, forex, stock market, commodities, options and futures may not be suitable for everyone and involves the risk of losing part or all of your money. Trading in the financial markets has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the markets. Don't invest and trade with money which you can't afford to lose. Forex Trading are not allowed in some countries, before investing your money, make sure whether your country is allowing this or not.

You are strongly advised to obtain independent financial, legal and tax advice before proceeding with any currency or spot metals trade. Nothing in this site should be read or construed as constituting advice on the part of Dizicx Global Limited or any of its affiliates, directors, officers or employees.

Restricted Regions: Dizicx Global Limited does not provide services for citizens/residents of the United States, Cuba, Iraq, Myanmar, North Korea, Sudan. The services of Dizicx Global Limited are not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

The website is operated by Dizicx Global Limited; Dizicx Global Limited is an Investment Dealer- Full Service Dealer (excluding underwriting) with company number: 199905 GBC. Dizicx Global Limited under the name of Dizicx Global Limited is authorized and regulated in Mauritius by the Financial Services Commission (FSC). Dizicx Global Limited with company number: 199905 GBC

Dizicx © 2023 - All Rights Reserved