Forex, also known as foreign exchange, is the largest and most liquid market in the world. It involves the buying and selling of currencies from different countries. The forex market is open 24 hours a day, five days a week and is accessible to traders worldwide. There are 28 forex pairs that are commonly traded in the forex market.
A forex pair is a financial instrument that involves two currencies. One currency is the base currency, and the other is the quote currency. The base currency is the currency that is being bought or sold, and the quote currency is the currency used to purchase the base currency.
The 28 forex pairs are divided into three categories: major pairs, minor pairs, and exotic pairs.
1. Major pairs: These are the most traded forex pairs in the market and involve the US dollar (USD). They 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 pairs are the most liquid and have the tightest spreads. They are also the most predictable and have the most trading opportunities.
2. Minor pairs: These are forex pairs that do not include the US dollar. They include:
– EUR/GBP (Euro/British pound)
– EUR/CHF (Euro/Swiss franc)
– EUR/JPY (Euro/Japanese yen)
– GBP/JPY (British pound/Japanese yen)
– AUD/JPY (Australian dollar/Japanese yen)
– CAD/JPY (Canadian dollar/Japanese yen)
– CHF/JPY (Swiss franc/Japanese yen)
– NZD/JPY (New Zealand dollar/Japanese yen)
– AUD/NZD (Australian dollar/New Zealand dollar)
– EUR/CAD (Euro/Canadian dollar)
– EUR/AUD (Euro/Australian dollar)
– GBP/CHF (British pound/Swiss franc)
– GBP/AUD (British pound/Australian dollar)
– GBP/CAD (British pound/Canadian dollar)
These pairs are less liquid than the major pairs and have wider spreads. They are also less predictable and have fewer trading opportunities.
3. Exotic pairs: These are forex pairs that involve a major currency and a currency from an emerging or developing country. They include:
– USD/HKD (US dollar/Hong Kong dollar)
– USD/MXN (US dollar/Mexican peso)
– USD/SGD (US dollar/Singapore dollar)
– USD/THB (US dollar/Thai baht)
– USD/ZAR (US dollar/South African rand)
– USD/TRY (US dollar/Turkish lira)
– USD/SEK (US dollar/Swedish krona)
– USD/NOK (US dollar/Norwegian krone)
These pairs are the least liquid and have the widest spreads. They are also the most unpredictable and have the fewest trading opportunities.
In conclusion, the forex market is a vast and complex market that involves the buying and selling of currencies from different countries. The 28 forex pairs are the most commonly traded pairs in the market and are divided into three categories: major pairs, minor pairs, and exotic pairs. Each category has its own characteristics, and traders must understand these characteristics to make informed trading decisions. The major pairs are the most liquid and predictable, while the exotic pairs are the least liquid and unpredictable.