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Abstract:The luxury of highly leveraged trading with less margin needed than in equities markets is available to traders. However, you must first become familiar with the most popular currency pairs for trading before diving deeply into the fast-paced world of forex.
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The luxury of highly leveraged trading with less margin needed than in equities markets is available to traders. However, you must first become familiar with the most popular currency pairs for trading before diving deeply into the fast-paced world of forex.
Here are six of the forex currency pairings that are most often traded.
EUR/USD 1.
The USD/CHF and GBP/USD currency pairs tend to correlate negatively and favorably for the EUR/USD currency pair, respectively. This is a result of the euro's strong link with the pound and the Swiss franc.
2. USD/JPY: Trading the “Gopher”
The next most actively traded pair has traditionally been the USD/JPY. This pair has been sensitive to political sentiment between the United States and the Far East. The pair tends to be positively correlated to the USD/CHF and USD/CAD currency pairs due to the U.S. dollar being the base currency in all three pairs.
3. GBP/USD: Trading the “Cable”
The GBP/USD pair tends to have a negative correlation with the USD/CHF and a positive correlation to the EUR/USD. This is due to the positive correlation between the British pound, the Swiss franc, and the euro.
4. Trading the “Aussie”: AUD/USD
Due to the fact that the U.S. dollar is used as the quotation currency in the USD/CAD, USD/CHF, and USD/JPY pairs, there is a tendency for the AUD/USD currency pair to have a negative correlation with these pairs. The USD/CAD correlation also results from the fact that, being commodities block currencies, the CAD and AUD have a positive correlation with one another.
5. Trading the “Loonie” in USD/CAD
Due to the U.S. dollar serving as the quotation currency in these other pairs, the USD/CAD currency pair has a tendency to have a negative correlation with the AUD/USD, GBP/USD, and EUR/USD pairs.
6. Trading the Yuan in USD/CNY
The exchange rate between the US dollar and the Chinese renminbi, also called the yuan, is represented by the USD/CNY currency pair. It has made up roughly 4% of daily FX deals in recent years.
Recent years have seen a deterioration in the US-China trade relationship, which has given USD/CNY traders several possibilities for speculation.
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
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