In the forex market, there are different ways currencies are classified. However, we will start with the most popular currency classification which involves the major currencies that are traded in the forex market. Major currencies traded in the forex market include the US dollar, British pound, euro, Japanese yen, Australian dollar, Swiss franc, Canadian dollar, and New Zealand dollar. Basically, these major currencies are highly liquid.
The next mostly traded currencies in the forex market known as exotic currencies are less liquid than major currencies. It includes the Turkish lira, Czech krona, Argentine peso, Mexican peso and a few more currencies. These currencies come with higher volatility than the major currencies. They are better for veteran traders who have mastered the act of trading and know how to properly manage their risk.
For newbies who want some forex trading for beginner’s tips, you can’t trade one single currency in the forex market. The currencies are always trade in pairs. All the currency pairs that include the US dollars whether as the base currency or the counter currency is referred to as major pairs.
The US dollar is connected to roughly 80 percent of currencies pairs traded in the forex market. You can get more information on how these trades’ work, through forex trading tutorials which you can find on the websites of most forex brokers. Forex forums and forex wikis are another good place to get forex trading information. Some examples of major pairs traded in the forex market are EUR/USD, GBP/USD, and USD/JPY.
The currency pairs which don’t contain the USD but contains any of the other seven major currencies traded in the forex market are referred to as cross currency pairs. Examples of these currency pairs include the GBP/JPY, AUD/NZD and EUR/GBP.