The majority of trading in forex is concentrated in the world's major financial centers, such as London, New York and Tokyo. In fact, in April 2016, sales desks in a mere five countries intermediated 77% of foreign exchange trading.

The currency market is also the only market that is open 24 hours a day with a high degree of liquidity throughout the day. For traders who may have a day job or just a busy schedule, it's a great market to start trading in. As you can see from the chart below, the major trading centers are spread throughout many different time zones, eliminating the need to wait for an opening or closing bell. As the U.S. trading closes, other markets in the east are opening, making it possible to trade at any time during the day.

Time Zone

Time (ET)

Tokyo Open

7:00 pm

Tokyo Close

4:00 am

London Open

3:00 am

London Close

12:00 pm

New York Open

8:00 am

New York Close

5:00 pm

Unlike the equities markets where there are thousands of assets to choose from, FX traders tend to focus on a handful of the most popular currency pairs known as the majors. More specifically, a major currency pair is generally comprised of the most frequently traded currencies from countries such as: Australia, Canada, Switzerland, Great Britain, Japan etc.

Generally speaking, a major currency pair refers to a popular currency that is then paired against the U.S. dollar. You may find it interesting to know that, according to the Bank For International Settlements, in April 2016, the U.S. dollar was on one side of 88% of all trades. In recent years there has also been a growing interest in trading currencies of various emerging markets. For example, the share of daily trades of the renminbi, the official name of the currency of China, doubled to 4% to become the world’s eighth most actively traded currency and the most actively traded emerging market currency, overtaking the Mexican peso.

Typically, a lot of the activity in the forex market is done by central banks, hedge funds, institutional investors and large corporations. But success in this market doesn't depend on how big you are - it depends on your dedication to learning the fundamentals, good judgment, hard work and some common sense. This section will introduce you to the major currencies in the forex market.

Each forex transaction involves two different trades: the purchase of one currency and the sale of another. That is why forex quotes are quoted as a combination of two currencies, which is known as a currency pair. While there are many possible currency pairs, the most heavily followed and traded currencies are listed in the table below.

You may notice that the total market share adds to more than 100%, which is a result of currency pairs.

Currency

Market Share

USD

87.6%

EUR

31.4%

JPY

21.6%

GBP

12.8%

AUD

6.9%

CAD

5.1%

CHF

4.8%

CNY

4.0%

SEK

2.2%

Figure 1: The most heavily traded currencies and their market share

Source: BIS Triennial Survey, 2016

As mentioned above, the U.S. dollar (USD) is the most followed and traded currency in the world. For those getting started, it is a good idea to get to know one major currency pair and practice trading that currency pair alone before adding others. Later on in this tutorial we’ll examine the relationships between the U.S. dollar and many of its major currency counterparts, such as the euro and the yen to help you choose a currency pair so that you can start trading forex. (Learn the essence of currency exchanging in How do I convert dollars to pounds, euros to yen, or francs to dollars, etc.?)

Reading a Forex Quote

Related Articles
  1. Trading

    The 6 Most-Traded Currencies And Why They're So Popular

    Every currency has specific features that affect its underlying value and price movements in the forex market.
  2. Trading

    The Forex Market: Who Trades Currency And Why

    The forex market has a lot of unique attributes that may come as a surprise for new traders.
  3. Trading

    4 Of The Most Popular Traded Currencies

    Every day, trillions of dollars trade in the forex market. Here are a few of the most popular currencies, and some characteristics for each.
  4. Trading

    Strategies For Part-Time Forex Traders

    We present some ways that you can still profit in forex, even with an inconsistent trading schedule.
  5. Trading

    Drastic Currency Changes: What's The Cause?

    Currency fluctuations often defy logic. Learn the trends and factors that result in these movements.
  6. Trading

    Top 5 Hardest-Hit Currencies

    The value of a country's currency is dependent on many factors that will cause it to fluctuate, relative to other world currencies.
  7. Trading

    Top 5 Reasons To Invest In Currencies

    Here's why you should get into the forex market.
Frequently Asked Questions
  1. How did the ABX index behave during the 2008 subprime mortgage crisis?

    Read about the disastrous performance of the various ABX indexes in the subprime mortgage crisis of 2008 during the middle ...
  2. How did moral hazard contribute to the 2008 financial crisis?

    Learn about moral hazard, how it can affect outcomes and how it contributed to the conditions that led to the 2008 financial ...
  3. Which mutual funds made money in 2008?

    Read about the only mutual fund that turned a profit in 2008. Learn about risk-averse investment strategies and the financial ...
  4. Were Collateralized Debt Obligations (CDO) Responsible for the 2008 Financial Crisis?

    Collateralized debt obligations are exotic financial instruments that can be difficult to understand, Learn the role they ...
Trading Center