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.
Forex EducationHere's an introduction to six of the most tradable currency pairs in the forex market.
ForexThere are major currency pairs in the forex market which you should know about.
Forex EducationThe forex market has a lot of unique attributes that may come as a surprise for new traders.
Forex EducationWhile this online forex tutorial only represents a fraction of all there is to know about forex trading, we hope that you've gained some insight into this topic. We also encourage those of you ...
ForexThe major currencies in the forex market.
Options & FuturesWhen 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.
Forex EducationAs of January 2012, foreign exchange market accounts for more than $4 trillion in average traded daily value, making it the largest financial market in the world. No central marketplace exists ...
ForexThe differences between forex and the equities market
Forex EducationTrading foreign currencies can be lucrative, but there are many risks. Investopedia explores the pros and cons of forex trading as a career choice.
ForexLearn how this measure of change is used in trading currencies on the forex market.
You May Also Like