Forex Pairs: What Is The Most Ideal Currency Pair To Trade?
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Forex pairs are always involved in foreign exchange trading. The pair is the 2 currencies involved in your trade. For instance if you are exchanging US dollars for Swiss francs, the currency pair is USD/CHF.
In theory, you can trade any 2 currencies of the world, however in practice most foreign currency trading has limitations to the currencies of the greater financial powers. This doesn’t necessarily indicate the largest or most politically powerful nations. Switzerland for instance is just a small country yet is a main player in the financial markets due to the worldwide importance of the Swiss banks.
There are six major forex pairs which together account for 90 percent of the funds traded on the foreign exchange markets. These are:
- EUR/USD: the euro and US dollar.
- GBP/USD: the British pound and US dollar, nicknamed “Cable” since it was once synchronized on both sides of the Atlantic by a cable running beneath the ocean.
- USD/JPY: the US dollar and Japanese yen.
- USD/CHF: the US dollar and Swiss franc.
- AUD/USD: the Australian dollar and US dollar.
- USD/CAD: the US dollar and Canadian dollar.