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The 5 Most traded Currency Pairs In 2023
The foreign exchange market is the largest financial market in the world, trading $6.6 trillion every day. The foreign exchange market is open 24 hours a day, five days a week.
There are many opportunities for foreign exchange trading.
When you start forex trading, you have a lot to learn, and for a beginner, it can be overwhelming. One of the main problems for beginners in forex trading is choosing which currency pairs to trade.
Not all currency pairs are the same. What is the difference between major currency pairs, minor currency pairs and exotic currency pairs? It is not surprising that you may feel baffled by the choice.
What forex trading novices may not know is that each currency pair has unique characteristics. They do not all behave the same way. Some currency pairs have more liquidity and volatility than others.
What are the best currency pairs for beginners?
Your experience and skill will determine your choice. It also depends on the trading strategies you prefer. For example, do you trade forex scalping, day trading or swing trading?
In this article we will explain what currency pairs are and help you decide which currency pairs you should focus on for your preferred trading style.
We have picked out five of the most popular forex currency pairs for 2023. These currency pairs are the most traded by both beginners and experienced forex traders.
What is forex currency trading?
Forex traders buy and sell currency pairs to make profit from daily price fluctuations. Each currency pair represents two currencies. For example, GBP/USD stands for the British pound and the US dollar. The first currency listed is called the base currency and the second currency listed is the quote currency. So the GBP is the base currency and the USD is the quote currency.
When you buy this currency pair, you are assuming that the rate of the pound sterling will go up. When you sell the currency pair, you assume that the US dollar is stronger than the pound and the rate will fall.
Although you are selling the currency pair, you are basically buying the dollar in the expectation that the price of the currency pair will fall.
What are the top 5 forex currency pairs?
It is debatable whether there are seven or eight major currency pairs, so let us look at what constitutes a major currency pair.
The strongest and most traded currency is the US dollar. That’s not surprising because the United States economy is the largest in the world. The dollar is the world’s dominant reserve currency and the preferred global currency of exchange. So the dollar carries some weight.
The majors all contain the U.S. dollar.
Below are five of the major foreign exchange currencies:-
- EUR/USD – (Euro – U.S. Dollar)
- GBP/USD – (British Pound – U.S. Dollar)
- USD/CHF – (U.S. Dollar – Swiss Franc)
- USD/JPY – (U.S. Dollar – Japanese Yen)
- AUD /USD – (Australian dollar – American dollar)
The above list is not exhaustive. The USD/CAD is traded as frequently as the USD/CHF, but oil prices can help determine the price movement of the USD/CAD.
Another heavily traded major currency pair is NZD/USD.
Later in the article, we will look at the characteristics of the 5 most traded currency pairs on the list above.
The prices of major currency pairs fluctuate as trading volumes change constantly, especially when economic news or unexpected world events are announced.
The common denominator of these currency pairs is that they represent countries with a high volume of global trade, and they are also countries with financial power.
The top five forex currency pairs are popular because they have liquidity and volatility and offer forex traders the best trading opportunities.
Does this mean they are the best currencies to trade?
Well, even with the best currency pairs for forex trading, you can lose. You still need to read the market, find the best setups and make a trade at the best time.
The major currency pairs tend to have lower spreads and generally offer better trading conditions for retail forex traders. The trick is to familiarize yourself with the 5 most traded currency pairs, and as you become more familiar, it becomes easier to see the price behavior and patterns for each currency pair.
