Major, Forex Trading Pairs. PDF Print E-mail
Written by Adam Woods   
Wednesday, 07 April 2010 20:13
The forex market is the largest financial market in the world and has a different set up from trading stocks and shares. The value of a currency is dependent on its other pair for example the pound becoming weaker against the dollar, where as stocks and shares is just the value of a companies' growth or expected growth. In order to trade the forex market they are set out in standard trading pairs.
by AdamWoods


The forex market is the largest financial market in the world and has a different set up from trading stocks and shares. The value of a currency is dependent on its other pair for example the pound becoming weaker against the dollar, where as stocks and shares is just the value of a companies' growth or expected growth. In order to trade the forex market they are set out in standard trading pairs.

There are well over 150 different trading pairs which are classified as major, minor and exotic. The most traded are the Major six of which are traded against the U.S. Dollar. The trading pairs in the six groups are as follows; AUD/USD (Australian Dollar Vs' U.S. Dollar), EUR/USD (Euro Vs' U.S. Dollar), GBP/USD (British Pound Vs' U.S. Dollar), USD/CAD (U.S. Dollar Vs' Canadian Dollar), USD/CHF (U.S. Dollar Vs' Swiss Franc), USD/JPY (U.S. Dollar V's Japanese Yen).

You can see that the list of six trading pairs above has the USD as the second currency pair in the first three and as the first currency pair in the last three. This is indicative to how a trader using charts to read technical data will set out his charts to view. You will later learn that some of these trading pairs have a direct effect on each other and for this reason an experienced trader will want to view all six charts at once. The set up for this will be a block of six charts on the monitor in two rows of three. The top three from left to right will read; AUD/USD, EUR/USD and the GBP/USD. The bottom three charts again left to right will read USD/CAD, USD/CHF and finally USD/JPY.

When this chart set up has been established it is possible to see the market as a whole and as some of the trading pairs have direct influence on what another is doing it can give tell tale signs as to which each currency is about to do. One of the better examples of this is the EUR/USD and the USD/CHF. With the charts set out as outlined in the previous paragraph the USD/CHF should be directly below the EUR/USD and you can see that they are almost a butterfly image of each other. You may be about to take a trade on the EUR/USD but notice the USD/CHF is coming up to a psychological number if the USD/CHF stalls or hits resistance at the psychological number it is likely to stall the EUR/USD as well.

You will notice that certain trading pairs are not as volatile as the others and this may well effect the way in which you trade them individually. It is known that the GBP/USD is the most volatile currency and although this can cause it to be the most profitable it is known to have violent swings within its trends and should be traded with caution. For beginners it is best to stick to a more stable slower trading pair such as USD/JPY until some experience is gained.

DISCLAIMER: This article is provided as information only and is not to be taken as financial advice.

Adam had been trading forex for years with little success. Adam originally had no experiance of the forex markets so hesigned up to Colin Atkin's selected members club. Colin is a professional trader who shares his trading live, all you have do is watch & copy what he does and take the profits. Since Adamsigned up to Colin he has had the money to invest in other projects.