If you have been planning to trade in Forex, it’s critical you know the differences between major and minor currency pairs. These pairs can represent varying degrees of risk and opportunity. And as such, it’s always worth considering what these pairs are and how they work.
While there’s no exact, specified definition for major currency pairs, it’s generally accepted that major currency pairs are the most popular markets for trading. Generally, major currency pairs will include currencies such as the Euro, the USD, GBP, the Yen, AUD, NZD, and CHF. These will often be the currencies with the highest liquidity. Higher liquidity makes them attractive prospects for Forex traders.
Major currencies and their rates are usually affected by multiple factors such as economic data, interest rates, politics, and general volatility.
Major currency pairs are safer options for investors, although that’s not to say they come without risks. As such, they could be a valuable option to consider for your own investment opportunities. If you’ve been thinking about trying Forex trading, particularly as a new trader.
In addition to major currencies, there are countless other minor and exotic currencies trades could choose. However, minor and exotic currencies are far less popular trading options, representing a significant issue for many traders. Since these markets are less liquid, they are more prone to large fluctuations and slippage, making investing in these currencies far riskier for Forex traders.
As a Forex trader, choosing the right trades is pivotal. While it’s possible to make money on illiquid markets, such as minor currency pairs and exotic currency pairs, this can often be more difficult. With this in mind, most Forex traders will instead invest in major currency pairs or trades between major and minor currencies to stabilize their investment, increase liquidity, and hopefully experience better returns and results.
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