There are dozens of currency pairs you can trade, but most trading volume is concentrated in a handful of major pairs. Understanding what drives each one helps you choose pairs that match your schedule and trading style. There is no single “best” pair for everyone.
Risk warning: Trading forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. You could lose money rapidly due to leverage. Past performance is not an indication of future results. This article is for education only and is not investment advice.
What are the major pairs?
The majors are the most traded pairs, and all of them include the US dollar:
- EUR/USD (euro / US dollar): the most traded pair in the world, driven largely by ECB and Federal Reserve policy.
- USD/JPY (US dollar / Japanese yen): sensitive to the gap between US and Japanese interest rates, and to risk sentiment.
- GBP/USD (British pound / US dollar): often called “cable”; moved by Bank of England policy and UK data, and can be volatile.
- USD/CHF (US dollar / Swiss franc): the franc is often seen as a safe-haven currency.
- AUD/USD (Australian dollar / US dollar): linked to commodity prices and China’s economy.
- USD/CAD (US dollar / Canadian dollar): influenced by oil prices.
- NZD/USD (New Zealand dollar / US dollar): linked to dairy exports and global risk appetite.
Minor and exotic pairs
Minor pairs (or “crosses”) do not include the US dollar, for example EUR/GBP, EUR/JPY or GBP/JPY. Exotic pairs combine a major currency with one from a smaller or emerging economy, such as USD/TRY or USD/ZAR. Exotics often have wider spreads, lower liquidity and sharper price swings, and can be more expensive to hold overnight.
How to choose which pairs to trade
- Liquidity and costs: majors usually have the tightest spreads.
- Your trading hours: pairs are most active when their markets are open. EUR/USD and GBP/USD are busiest in the London and New York sessions; AUD/USD and USD/JPY are active in the Asian session.
- Volatility: some pairs move more than others. Higher volatility means larger potential gains and losses.
- What you understand: it is easier to follow the news and data for a few economies than for many.
- Correlation: some pairs tend to move together, so trading several of them at once can increase your risk without you realising it.
Start with a small watchlist
Many beginners do better by focusing on one to three pairs, learning how they behave and which events move them, rather than jumping between many pairs. Our guide to how interest rates move forex markets explains one of the biggest drivers.
Summary
The major pairs offer the most liquidity and usually the lowest costs, but each has its own drivers and character. Choose a few pairs that fit your schedule, learn them well, and always use sound risk management. New to forex? Read What is forex and how does it work?.
Risk warning: Trading forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. You could lose money rapidly due to leverage. Past performance is not an indication of future results. This article is for education only and is not investment advice.