Forex or foreign exchange trading involves buying and selling currency pairs. There are a total of 28 forex pairs that are widely used in the financial markets. These forex pairs are divided into three categories: major, minor, and exotic. In this article, we will explain what these 28 forex pairs are and how they are used in trading.
Major Forex Pairs
The major forex pairs are the most traded currency pairs in the world. These pairs are made up of the US dollar and another major currency. The seven major forex 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
These pairs are considered major because they have high liquidity, which means they have more buyers and sellers in the market. Major forex pairs also have lower spreads, which is the difference between the bid and ask price, making them more cost-effective to trade.
Minor Forex Pairs
The minor forex pairs are also known as cross-currency pairs. These pairs do not include the US dollar, but they include other major currencies such as the euro, yen, and pound. The minor forex pairs are less liquid than the major pairs, which means the spreads are usually wider. The minor forex 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. AUD/NZD – Australian dollar/New Zealand dollar
10. AUD/CHF – Australian dollar/Swiss franc
11. GBP/CHF – British pound/Swiss franc
12. CAD/CHF – Canadian dollar/Swiss franc
Exotic Forex Pairs
The exotic forex pairs include currencies from countries that are not considered major economic powers. These pairs have lower liquidity than the major and minor pairs, which means the spreads are much wider. The exotic forex pairs include:
1. EUR/TRY – Euro/Turkish lira
2. USD/TRY – US dollar/Turkish lira
3. USD/MXN – US dollar/Mexican peso
4. USD/ZAR – US dollar/South African rand
5. USD/HKD – US dollar/Hong Kong dollar
6. USD/SGD – US dollar/Singapore dollar
7. USD/THB – US dollar/Thai baht
8. USD/SEK – US dollar/Swedish krona
9. USD/DKK – US dollar/Danish krone
Exotic forex pairs are not recommended for beginner traders because they have high volatility and can be unpredictable. However, experienced traders may use these pairs to diversify their portfolio and take advantage of market opportunities.
Conclusion
In summary, the 28 forex pairs are the currency pairs used in foreign exchange trading. There are three types of forex pairs: major, minor, and exotic. The major forex pairs are the most traded and have higher liquidity, while the minor and exotic pairs have lower liquidity and wider spreads. It is important for traders to understand the characteristics of each forex pair and choose the ones that best suit their trading strategy.
