HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

Top 5 most traded currency pairs


There are 180 currencies in circulation across the globe but not all are actively traded in the forex market. Only those currencies that have liquidity and show economic and political stability are traded. The forex market determines the exchange rate between the world’s currencies. Open 24 hours a day, 5 days a week, the forex market is also the largest financial market worldwide in which currencies are traded. The forex market is decentralised and is used by traders in countries all over the world to speculate on the price movements of currency pairs. This market sees a daily trading volume of US$6.6 trillion making it the most liquid financial market globally.

Most forex trades or payments are made in US$, Euro, British pound (GBP), and the Japanese yen (JPY). Other currencies traded include the Swiss franc, Canadian dollar (CAD), the Australian dollar (AUD), and the New Zealand dollar (NZD).

Bear market vs bull market

The terms bear and bull typically describe the state of a market at a particular time (i.e., market conditions). A bear market is one that shows a decline among currency prices, typically because of global events like political or financial crises, war, and environmental disasters. A bear market is usually characterised by risk averse investor behaviour. Bear markets come in all sizes and may last for any period. In contrast, a bull market is one that performs more optimistically, with currency prices usually taking an upward trend. A bull market typically sees a rise in investor confidence, and a more positive outlook of the forex market by traders.

Price movements in the forex market

Forex market fluctuations mostly come about because of economic trends and geopolitical instabilities. This includes international trade, inflation, political news and events, rates of employment (or unemployment), manufacturing indexes, the state of global capital markets natural disasters, and more. As a result, forex traders must stay informed on the global financial and political climate that may cause unexpected price movements and impact the success of their trades.

Who trades forex?

The forex market attracts a variety of different types of traders and larger institutions like hedge funds, central banks, investment managers, commercial banks, investment banks and individual investors. This volume of players in the forex market and the number of daily trades they execute is what makes it so highly liquid.

What are 5 of the most popular traded currency pairs?

All forex currencies are listed and traded in pairs. Forex traders speculate on the price movements of currency pairs, i.e., the increase or decrease in value of one currency vs another. Five of the most actively traded pairs (known as the majors) are:

Other popular currency pairs include GBP/EUR, USD/CHF, and NZD/USD.

The first currency in a currency pair is called the base currency. The currency listed next to it is referred to as the quote currency. In other words, in a GPB/USD currency pair, the base currency would be GBP and the quote currency is USD.

A trader looks to a currency pair to establish how much quote currency is required to buy a unit of base currency, i.e., currency pairs indicate the value of the base currency relative to the quote currency in the specific pair. Currency pairs have a bid price and an ask price. The price at which the trader is willing to sell the base currency is the bid price. In contrast, the ask price is the lowest price at which a trader can buy a base currency.

Why are major pairs so actively traded?

For one, major pairs usually have more volume, with smaller spreads between the bid and ask price appealing to most traders. This in turn keeps the volume consistently high. Further, traders can open and close trades more easily with volume, and with bigger position sizes. High volume also means traders may be more inclined to buy or sell at a given time as well. Consequently, the risk of slippage potentially becomes smaller but does not altogether disappear so caution should always be exercised to avoid losses.

Contracts for Difference (CFDs)

CFDs can be used to trade currency pairs. In the world of forex, a CFD is an agreement between a forex trader and a CFD forex broker to exchange the difference between the opening and closing price of an asset. The CFD forex broker earns a profit through spreads. CFDs are derivative products enabling the trader to speculate on financial markets without having to take ownership of the underlying assets. CFDs are also leveraged products enabling a trader to open a trade by paying just a margin of a contract’s value. Leverage is however very volatile and how much leverage a forex trader uses to open trades is usually based on the level of risk they’re prepared to incur.  If not properly managed, leverage can see the trader losing large amounts of capital.

Becoming a successful forex trader

If you are now starting your forex trading journey, learning as much as you can about how to trade, understanding currency trends, adopting a trading style suited to you, and developing a trading strategy that will help you achieve your trading goals are key.

Key steps before trading forex on a live account

#source


RELATED

Factors affecting the Forex Market

There are several external factors that affect Forex currency trading. These factors include trade reports, GDP, unemployment, international trade, manufacturing etc...

Mastering Bond Trading in 2023: Strategies and Insights

Bonds, often known as fixed income securities, remain a fundamental financial instrument for both governments and corporations, allowing them to raise capital for various projects and operations...

Challenges in Forex Trading: Understanding and Mitigating Drawdown

In the vast landscape of the Forex market, as with all financial arenas, traders invariably encounter numerous challenges. One such formidable challenge is the deposit drawdown...

How Much Money Can You Make Trading Forex? A Comprehensive Guide

Forex trading has witnessed a surge in popularity as individuals seek opportunities to profit from financial markets. However, it's paramount to approach forex trading with realistic expectations...

Ten Forex Trading Tips for 2023

The foreign exchange (forex) market is the largest and most liquid financial market in the world, with a turnover of more than USD 5 trillion every day...

What Are Forex Signals, And How Can You Use Them?

If you're looking to enhance your chances of success in the market, Forex signals can be an excellent tool to consider. These signals have the potential to help...

What is CFD Broker?

Let’s jump into what CFDs are, what a CFD broker is, and how to go about choosing one that bests suit your trading needs. Contracts for Differences (CFDs) are a type of derivative instrument...

What Is Money Flow Index (MFI) In Forex Market Trading

One of the most important functions of financial markets, including the foreign exchange market, is the redistribution of money. Through the purchase/sale of stocks....

Temporary Relief to Commodities Supply: Black Sea Grain Deal

The Black Sea grain deal extension did not prevent wheat prices from experiencing a decline, as uncertainty surrounding the deal’s future continues to loom...

Navigating Ethical Challenges in AI-Driven Trading: Bridging Wealth Inequalities

AI-driven trading has undoubtedly introduced numerous advantages for traders. Its ability to swiftly process vast data, formulate solutions, and execute trades within milliseconds...

The Evolution of Modern Investment Methods: An Exploration of Copy Trading and PAMM Services

Investment methodologies have traversed an intricate journey, and in today's digitized world, they've undergone a significant transformation. The ubiquity of the internet and cutting-edge computer technologies...

Top 7 Richest Forex Traders in the World

If you want to attain high achievements in a specific sphere, it is essential to learn its history, which we consider the foundation to your personal successful career in trading...

Why traders shouldn’t underestimate an Economic Calendar

Brace yourselves for the ultimate weapon in your trading arsenal - an Economic Calendar, revealing the future of financial markets. So, why should you care?

Unlocking the Potential of Real World Assets (RWAs) in Crypto

The world of finance is witnessing a transformative revolution with the advent of real world asset tokenization, or RWAs, in the cryptocurrency space. Imagine having the opportunity to own a fraction...

Currency trading made clear: an Octa guide

In keeping up with its clarity principle, the international broker Octa clarifies one aspect of trading at a time. Learn everything you need to know about currency trading, simply and transparently...

Stock Buybacks: Why Do Companies Buy Back Shares?

In recent years, buyback programs have become one of the growth drivers of U.S. stock markets, creating demand and reducing supply. Corporations have proved to be quite prominent buyers...

How much does Metatrader 4 cost

Venturing into the world of forex trading requires research and knowledge. This becomes particularly important when choosing your trading platform and the broker through whom you’ll trade...

How patience impacts your trading psychology

Trading psychology plays a major role in determining trading success. It refers to the emotions, behaviours, and various other aspects of a trader’s character that may impact their trading decisions...

Federal Funds Rate vs Discount Rate

In 1913 the USA government passed a law, according to which...

The global financial trend of the hour: Forex investments

Quite the confusion is afoot in the financial markets. Tighter regulation, rising inflation, energy sector disruptions, social unrest and wars have taken a toll on the world's economies. How come Forex, as a means of investment...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.