Ok, so you know what you need to do to get started in forex. You know the risk and the benefits. You know how leverage can be a double-edged sword for forex traders. Now let's take a look at the currencies that forex traders use to make their profit.There are many official currencies that are used all over the world, but there only a handful of currencies that are actively traded in the forex market. In currency trading, only the most economically and politically stable and liquid currencies are traded in large quantities. For example, due to the size and strength of the U.S. economy, the U.S. dollar is the most actively traded currency in the world.

In general, eight of the most traded currencies are the U.S. dollar (USD), the euro (EUR), the Japanese yen (JPY), the British pound (GBP), the Australian dollar (AUD), the Canadian dollar (CAD),  the Swiss franc (CHF), and the New Zealand dollar (NZD.

As you already have learned, currencies must be traded in pairs. Mathematically, there are 27 different currency pairs that can be traded from those eight currencies alone. However, there are about 18 currency pairs that are most often quoted by forex market makers because of their overall liquidity. These pairs are:

 

EUR/CAD

GBP/CHF

EUR/AUD

GBP/USD

EUR/USD

GBP/JPY

EUR/CHF

AUD/USD

EUR/GBP

AUD/JPY

EUR/JPY

AUD/NZD

USD/CHF

AUD/CAD

USD/CAD

CHF/JPY

USD/JPY

NZD/USD

 

 

The total amount of currency trading involving these 18 pairs represents the vast majority of the trading volume in the overall FX market. This relatively small number of choices makes trading a lot less complicated compared to dealing with stocks, where choices number in the thousands. (For more, see Top 8 Most Tradable Currencies.)

Now that you've learned about the major currencies that are traded on the forex market you might think you're ready to jump in head first and start trading. Well slow down, because you can't know where you're going until you know where you've been. Let's take a look at the history of the forex market and get to know the major players in today's market.

History of Forex Markets

Related Articles
  1. Trading

    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. Learn more about who trades foreign currencies and why.
  2. Trading

    6 Top-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.
  3. Trading

    8 Basic Forex Market Concepts

    We go over some of the things you need to understand before you can trade currencies.
  4. Trading

    Top 5 Reasons To Invest In Currencies

    Here's why you should get into the forex market.
  5. Trading

    Economic Factors That Affect The Forex Market

    Keep pace in the competitive and fast-moving foreign exchange (forex) markets by knowing the economic factors and indicators to watch.
  6. Trading

    Top 5 Forex Risks Traders Should Consider

    With a long list of risks, losses associated with foreign exchange trading may be greater than initially expected. Here are the top 5 forex risks to avoid.
Frequently Asked Questions
  1. What are general and administrative expenses?

    General and administrative expenses are not directly attributable to the production of goods and services and include audit ...
  2. Why is social responsibility important to a business?

    Companies that engage in social responsibility help improve the company's brand, attract and retain top talent, and improve ...
  3. How do currency swaps work?

    Learn how a currency swap works, including who uses these transactions, and the mechanics and purpose of the different cash ...
  4. What is a debt/equity swap?

    Learn why companies issue debt/equity swaps, what they are, and how they impact shareholders and debt holders.
Trading Center