The forex market, also known as the foreign exchange market, is the largest financial market in the world. It is a decentralized market where currencies are traded 24 hours a day, 5 days a week. The forex market is responsible for trillions of dollars in daily trading volume, and it is an essential part of the global economy.
In the forex market, currencies are traded in pairs. A currency pair is the exchange rate between two currencies, and it is represented by a three-letter code. There are 28 currency pairs in the forex market, and they are classified into three categories: major, minor, and exotic.
Major Currency Pairs
The major currency pairs are the most actively traded pairs in the forex market. They account for over 80% of the daily trading volume. The major currency pairs include:
1. EUR/USD (Euro/US Dollar)
2. USD/JPY (US Dollar/Japanese Yen)
3. GBP/USD (British Pound/US Dollar)
4. USD/CHF (US Dollar/Swiss Franc)
5. AUD/USD (Australian Dollar/US Dollar)
6. USD/CAD (US Dollar/Canadian Dollar)
7. NZD/USD (New Zealand Dollar/US Dollar)
The EUR/USD pair is the most traded currency pair in the forex market. It accounts for over 20% of the daily trading volume. The USD/JPY pair is the second most traded currency pair, followed by the GBP/USD pair.
Minor Currency Pairs
The minor currency pairs, also known as cross currency pairs, are less actively traded than the major currency pairs. They are pairs that do not include the US Dollar. The minor currency pairs include:
1. EUR/GBP (Euro/British Pound)
2. EUR/CHF (Euro/Swiss Franc)
3. EUR/JPY (Euro/Japanese Yen)
4. GBP/JPY (British Pound/Japanese Yen)
5. CHF/JPY (Swiss Franc/Japanese Yen)
6. AUD/JPY (Australian Dollar/Japanese Yen)
7. CAD/JPY (Canadian Dollar/Japanese Yen)
8. NZD/JPY (New Zealand Dollar/Japanese Yen)
9. GBP/CHF (British Pound/Swiss Franc)
10. AUD/NZD (Australian Dollar/New Zealand Dollar)
11. EUR/AUD (Euro/Australian Dollar)
12. EUR/CAD (Euro/Canadian Dollar)
Exotic Currency Pairs
The exotic currency pairs are pairs that include a major currency and a currency from an emerging market or a less developed country. These pairs are less actively traded than the major and minor currency pairs, and they have wider bid-ask spreads. The exotic currency pairs include:
1. USD/HKD (US Dollar/Hong Kong Dollar)
2. USD/SGD (US Dollar/Singapore Dollar)
3. USD/ZAR (US Dollar/South African Rand)
4. USD/TRY (US Dollar/Turkish Lira)
5. USD/MXN (US Dollar/Mexican Peso)
6. USD/INR (US Dollar/Indian Rupee)
7. USD/BRL (US Dollar/Brazilian Real)
8. USD/RUB (US Dollar/Russian Ruble)
9. USD/CNH (US Dollar/Chinese Yuan)
Conclusion
In conclusion, the forex market is a vast and complex market where currencies are traded in pairs. There are 28 currency pairs in the forex market, and they are classified into three categories: major, minor, and exotic. The major currency pairs are the most actively traded pairs in the forex market, followed by the minor currency pairs and the exotic currency pairs. Understanding the different currency pairs and their characteristics is essential for successful trading in the forex market.
