The Seven Most Tradable Pairs of popular Currencies

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Most Tradable Currencies

The trading of foreign currencies in the Forex Markets always occurs in pairs. The trading of the currencies occurs in USD amounts known as lots. A single lot is worth $1000 USD, and this controls $100000 worth in currency, and it is what is termed as the �margin.’ This rule implies that a trader is able to control $100000 in worth by only using $1000 USD and this is what is termed as a high leverage. The trading of currencies in the Foreign exchange markets occurs in pairs, and these pairs of popular currencies are given unique notations, which show the types of currencies being traded. The notations are made in this format – ABC/DEF – and the ABC denotes the currency of the first currency in the pair, while DEF denotes the second currency in the pair. In essence, a currency can never be traded against itself because one currency should be compared to another in the trade. There are approximately seven popular trading pairs, which account for an estimated 95% of the total speculative foreign exchange trading in the world. However, there is a total of about 18 pairs, which are actively traded all over the globe, and it is normal to find some traders trading less popular currencies such as the Czech Koruna and the Thai Baht. Read on to know the seven most traded pairs across the Forex (FX) markets.

GBP/USD (British Pound/USD) – Cable’
Perhaps the first most popular trading pair is the Great Britain pound versus the American dollar (USD) alternatively nicknamed the �cable.’ Trading the cable pair often has a positive correlation with other pairs such as the Euro/USD pair, and a negative correlation with other pairs such as the USD/Swiss Franc.

USD/CHF (USD/Swiss Franc) – Swissie’
The USD is also often traded against the Swiss Franc in a pair known as the Swissie.’ The pair tends to have a correlation that is negative in the Euro/USD pair where if one currency moves up or down, the other currency in the pair moves in the opposite direction. The pair has a positive correlation when reviewed in relation to the GBP/USD, and both currencies in the pair tend to move in the same direction in this correlation with the GBP/USD. In fact, the Swiss Franc, GBP, and Euro have positive correlations, and the Franc is often an ideal safe-haven currency in times of political tumults.

USD/JPY (USD/Japanese Yen) – Gopher’
The USD/Yen pair is perhaps the second most traded pairing and it is also known as the Gopher.’ This trading pair has a correlation that is positive to the USD/CAD and USD/CHF pairs due to the fact that the USD is the base currency in the fractional pair in all pairs.

USD/CAD (USD/Canadian dollar) – Loonie’
The USD versus Canadian dollar trading creates a pair alternatively known as the Loonie.’ The pair has a negative correlation to the GBP/USD, Euro/USD and the Australian dollar/USD pairs because the USD takes the place of a base currency.

AUD/USD (Australian dollar/USD) – Aussie’
The Australian dollar trading versus the US dollar is nicknamed the Aussie.’ This trading pair has a correlation that is negative with all pairs, which do not use the USD a quoted currency.

EUR/USD (Euro/USD) – Euro’
The trading of the Euro against the USD is also a popular pair, which is nicknamed the Euro.’ In this pair, when one places an order to purchase the EUR/USD, one is actually purchasing the Euro and selling the US dollar.

NZD/USD (New Zealand dollar/USD) – Kiwi’
The last trading pair is the New Zealand dollar against the USD, and the pair is popularly known as the kiwi.’ This pair is also referred to as a commodity pair, and it is less traded than the first four pairs highlighted above.

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The Seven Most Tradable Pairs of popular Currencies

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