Partner code
16187
for assistance

Currency pairs in forex: How to trade effectively

Are you learning about forex and want to know what currency pairs in forex are? How to trade with them and valuable experiences to succeed in this market? This article, Learn Forex Trading will provide you with necessary and useful information about currency pairs in forex.

General information about currency pairs in forex

To start trading with forex currency pairs, traders need to understand the following basic information about the market.

What is forex currency?

Forex (foreign exchange) means foreign currency exchange. This is the world’s largest and most vibrant financial market. With a daily trading volume of more than 6 trillion USD. In forex, you don’t buy or sell an individual currency, you buy or sell a currency pair. A currency pair is a combination of two different currencies, for example, USD/JPY, EUR/USD, GBP/USD, etc.

Each currency pair has a value that represents the exchange rate between those two currencies. For example, if the price of the EUR/USD pair is 1.2000. That means you need 1.2 USD to buy 1 EUR, or you will receive 1.2 USD when selling 1 EUR.

See more: You will regret not knowing about XAUUSD

Major currency pairs on the market trading

There are many currency pairs in forex and there are more than 28 major forex pairs list traded on the market. However, not all are popular and have high liquidity. The main currency pairs traded on the market:

USD/JPY: US Dollar & Japanese Yen
EUR/USD: Euro & US Dollar
GBP/USD: British Pound & US Dollar
USD/CHF: US Dollar & Swiss Franc
USD/CAD: US Dollar & Canadian Dollar
AUD/USD: Australian Dollar & US Dollar
NZD/USD: New Zealand Dollar & US Dollar

Major currency pairs account for about 80% of trading volume in the forex market. These currency pairs are highly volatile. Many news and economic events affect them, and there are low spreads.

Reasons why traders should trade forex with currency pairs in forex

There are many reasons for you to choose to trade with currency pairs forex. Here are important reasons for traders:

You can trade forex 24 hours a day, 5 days a week, from Sunday to Friday. The forex market is not limited by the opening hours of stock exchanges. The market is continuously connected through major financial centers such as London, New York, Tokyo, Sydney, and Singapore.
You can trade forex with a small capital. Traders only need a computer or smartphone with an internet connection. Also, have a trading account with a reputable broker.
Traders can profit from both uptrends and downtrends of currency pairs in forex. You can buy a currency pair when you think its price will increase. Then, sell it when you think its price will drop.

Reasons why traders should trade currency pairs

How to trade with forex currency pairs

To trade with forex currency pairs. Traders need to understand the characteristics and factors that affect each currency pair.

The Four Major Forex Currency Pairs

The four major forex currency pairs are currency pairs that involve the US dollar. The four major forex currency pairs are:

EUR/USD: This currency pair represents the correlation between the two largest economies in the world, the European Union and the United States. This currency pair is highly volatile and is affected by many economic news and events. Factors that affect this currency pair include the monetary policies of the European Central Bank (ECB) and the US Federal Reserve (FED), the consumer price index (CPI), etc.
USD/JPY: This currency pair represents the correlation between the two largest economies in Asia, the United States and Japan. Factors that affect this currency pair include the monetary policies of the FED and the Bank of Japan (BOJ), the consumer price index (CPI), the industrial production index (PMI), etc.
GBP/USD: This currency pair represents the correlation between the two major European economies, the UK and the US. Factors that influence this currency pair include the monetary policies of the Bank of England (BOE) and the FED, the consumer price index (CPI), etc. USD/CHF: This currency pair represents the correlation between the US dollar and the Swiss franc. This currency is considered a haven during times of economic and political uncertainty.

Currency pairs in forex with commodities

Currency pairs in forex with commodities are currency pairs related to major exporting or importing countries of commodities such as oil, gold, silver, copper, and agricultural products:

USD/CAD: This currency pair shows the correlation between the US and Canadian dollar. This is the world’s fourth-largest oil exporter.
AUD/USD: This currency pair shows the correlation between the Australian and US dollar. This is the world’s largest gold exporter.
NZD/USD: This currency pair represents the correlation between the New Zealand dollar and the USD. This is a large exporter of agricultural products such as milk, beef,…

Cross currency pairs

Cross-currency pairs are currency pairs that are not related to the US dollar. This is a combination of different currencies in major currency pairs. Cross-currency pairs include:

EUR/JPY: This currency pair represents the correlation between two major economies of Europe and Asia, the European Union and Japan.
EUR/GBP: This currency pair represents the correlation between two major European economies, the European Union and the UK.
GBP/JPY: This currency pair represents the correlation between two major European and Asian economies, the UK and Japan.

When trading with cross-forex currency pairs. Trade needs to closely monitor important news and economic events of relevant countries. Use technical and fundamental analysis tools to identify market trends and entry and exit points. At the same time, manage and hedge risks appropriately.

See more: Instructions for registering an Exness account

Effective trading experience with currency pairs in forex for traders

Trading with currency pairs in forex is not simply buying and selling based on emotion or luck. Below are some effective trading experiences with currency pairs for traders:

Carefully study the characteristics and factors that influence the currency pairs you want to trade. Understand the general trends, support and resistance levels, important milestones, and economic news and events that can cause fluctuations in those currency pairs.
Use technical and fundamental analysis tools to determine market entry and exit points. Traders can use technical indicators such as trends, moving averages, RSI, MACD,…
Manage and hedge risks appropriately. Traders need to determine the desired profit level and maximum loss tolerance for each trade. At the same time, set a stop loss order and a take profit order respectively.
Be patient and consistent. You need to have a long-term attitude and accept that you cannot always win every trade.

Conclude

So the article on Learn Forex Trading has shared with you information about currency pairs in forex. These are effective experiences in trading with currencies in forex. Hopefully, this article will help you gain the necessary knowledge and skills to succeed in the forex market.

FAQs:

What are the popular trading currency pairs on the market?

The main currency pairs in forex are those that involve the world’s largest economies, such as the US, Japan, UK, Germany, France, Canada, Australia, Switzerland, and New Zealand.

What are Currency pairs in forex with commodities?

currency pairs in forex with commodities are currency pairs related to major exporting or importing countries of commodities such as oil, gold, silver, copper, agricultural products, etc.