In the world of forex trading, there are many different currency pairs that traders can trade. These currency pairs can be categorized into three main categories: major pairs, minor pairs, and exotic pairs. A minor pair, also known as a cross pair, is a currency pair that does not include the US dollar as one of the currencies in the pair.
For example, the EUR/JPY is a minor pair because it includes the Euro and the Japanese Yen, but does not include the US dollar. Other examples of minor pairs include the GBP/JPY, AUD/NZD, and CHF/JPY.
Minor pairs are not as popular as major pairs, but they can still provide great trading opportunities for traders who are looking for more exotic trades. Minor pairs usually have lower liquidity and wider spreads than major pairs, which can make them more volatile and unpredictable. However, this can also mean that minor pairs can offer higher potential rewards for traders who are willing to take on more risk.
One of the advantages of trading minor pairs is that they can offer diversification to a trader’s portfolio. Since minor pairs are not as closely tied to the US dollar as major pairs, they can offer unique trading opportunities that are not available with major pairs. This can help traders reduce their overall risk and increase their chances of making profitable trades.
Another advantage of trading minor pairs is that they can offer higher trading volumes during certain times of the day. For example, the EUR/JPY and the GBP/JPY tend to have higher trading volumes during the European and Asian trading sessions, which can provide more trading opportunities for traders who are active during those times.
However, trading minor pairs can also be more challenging than trading major pairs. Since minor pairs are less popular, they may be more difficult to analyze and predict. In addition, minor pairs may be more susceptible to market manipulation and other factors that can cause sudden price movements.
To trade minor pairs successfully, traders need to be familiar with the currencies in the pair and the economic factors that can affect their value. This includes understanding the political and economic climate of the countries involved in the pair, as well as any news or events that may affect their currency values.
Overall, minor pairs can offer great trading opportunities for traders who are willing to take on more risk and do their research. By diversifying their portfolio with minor pairs, traders can increase their chances of making profitable trades and achieve greater success in their forex trading endeavors.
