Forex Trades 24 Hours A Day, 5 Days A Week.
Traders have the luxury of highly leveraged trading with lower margin requirements than equity markets. But before you jump in head first to the fast-paced world of forex trading, you'll need to know the currency pairs that traders trade most often. Here's a look at six of the most tradable currency pairs in forex.
The EUR/USD currency pair tends to have a negative correlation with USD/CHF and a positive correlation with the GBP/USD (more on these currency pairs later on). This is due to the positive correlation of the euro, the British pound and the Swiss franc. (To learn why the EUR/USD currency pair, see Why isn't the EUR/USD currency pair quoted as USD/EUR?)
USD/JPY: The "Gopher"
The next most actively traded pair has traditionally been the USD/JPY pair. This pair has been sensitive to political sentiment between the United States and the Far East. The pair tends to be positively correlated to the USD/CHF and USD/CAD currency pairs due to the U.S. dollar being the base currency in all three pairs.
GBP/USD: Trading The "Cable"
The GBP/USD pair tends to have a negative correlation with the USD/CHF and a positive correlation to the EUR/USD. This is due to the positive correlation between the pound, euro and the Swiss franc. (To learn more, read Forex: Making Sense Of The Euro/Swiss Franc Relationship.)
USD/CHF: Trading The "Swissie"
The USD/CHF currency pair tends to have a negative correlation with the EUR/USD and GBP/USD pairs. This is due to the strong positive correlation between the Swiss franc, pound and euro. The franc has long been thought of as a safe haven for forex traders in times of political unrest. (To learn more, read A Primer On The Forex Market.)
AUD/USD: Trading The "Aussie"
The AUD/USD currency pair tends to have a negative correlation with the USD/CAD, USD/CHF and USD/JPY pairs due to the U.S. dollar being the quote currency. As well, the correlation with the USD/CAD is also due to the fact that both the Canadian and Australian dollars share a positive correlation with each another as both currencies are commodity block currencies.
TradingThe forex market has a lot of unique attributes that may come as a surprise for new traders.
TradingA Guide To Choosing a Forex Broker
TradingWhen trading in forex, all currencies are quoted in pairs. Find out how to read these pairs and what it means when you buy and sell them.
TradingGetting started in this potentially profitable market is easier than you might think.
TradingMoving from equities to currencies requires you to adjust how you interpret quotes, margin, spreads and rollovers.
TradingForex trading may be profitable for hedge funds or unusually skilled currency traders, but for average retail traders, forex trading can lead to huge losses.
TradingIn this online tutorial, beginners and experts alike can learn the ins and outs of the retail forex market.
TradingEvery currency has specific features that affect its underlying value and price movements in the forex market.
Financial AdvisorLearn how this measure of change is used in trading currencies on the forex market.
Personal FinanceThese books are some of the best resources to learn about forex trading, covering everything from the basics of currency trading to advanced trading strategies.