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Explained for beginner: Major Pairs in Forex
Source: | Author:finance-102 | Date2023-01-26 | 213 Views | Share:
The foreign exchange market, also known as the forex market, is a decentralized market where currencies from different countries are traded. The major currencies in the forex market are the U.S. dollar (USD), the European Union's euro (EUR), the Japanese yen (JPY), the British pound (GBP), the Swiss franc (CHF), the Canadian dollar (CAD), and the Australian dollar (AUD). These currencies are considered major because they are the most heavily traded currencies in the world and are considered to have the most stable economies.

The foreign exchange market, also known as the forex market, is a decentralized market where currencies from different countries are traded. Major pairs in forex trading refer to the most heavily traded currency pairs in the market. These pairs involve the currencies of major global economies and typically have the highest volume and most consistent price action. The major currencies in the forex market are the U.S. dollar (USD), the European Union's euro (EUR), the Japanese yen (JPY), the British pound (GBP), the Swiss franc (CHF), the Canadian dollar (CAD), and the Australian dollar (AUD). 


These pairs are the most liquid and widely traded in the forex market, and as such, they often have the tightest bid-ask spreads, which makes them more attractive to traders. The popularity and large trading volume of these pairs also means that there is a wide range of information available on them, including market analysis, technical indicators, and economic reports.


There are several advantages to trading major forex pairs, including high liquidity, tight bid-ask spreads, and consistent volatility. Because these pairs are the most heavily traded in the forex market, they typically have the highest volume and the most consistent price action, making them ideal for traders who want to make quick trades or take advantage of short-term price movements. Additionally, because these pairs involve the currencies of major global economies, they are generally considered to be less risky than trading in other markets.


High Liquidity: The high trading volumes of major pairs mean that it is easy to enter and exit trades, even in large amounts, with minimal slippage. This is important for traders who want to execute trades quickly and at the desired price levels.

Tight Bid-Ask Spreads: Because of the large number of traders participating in the market, the bid-ask spreads for major pairs tend to be very tight. This means that traders can make trades with minimal cost, which can significantly increase profitability.

Consistent Volatility: Major pairs tend to be more stable and consistent in terms of price movements compared to other currency pairs. This makes it easier for traders to predict price movements and make informed trading decisions.

High Correlation with Economic Events: Major pairs are highly correlated with global economic events and announcements, such as changes in interest rates or GDP figures. This allows traders to better predict price movements based on these events.

Low Risk: Major pairs are generally considered to be less risky than trading in other markets, as they involve the currencies of major global economies.

Widely Available Information : Due to the high popularity of major pairs, there is a wide range of information available on them, including market analysis, technical indicators, and economic reports. This can help traders make more informed decisions when trading.

Diverse Trading Strategies: Due to the high liquidity and consistent volatility, the major pairs can be traded using a wide range of strategies, including scalping, swing trading, and position trading.

Easy to Understand: Major pairs involving USD and EUR are usually the most popular and understood by most traders. This makes it easier to enter the market and understand market trends and price movements.


In summary, trading major forex pairs offer a combination of high liquidity, tight bid-ask spreads, and consistent volatility, which makes them ideal for traders who want to take advantage of short-term price movements, predict price movements based on economic events, and execute trades with minimal slippage.