Major Currency Pairs in the Forex Market: A Quick Start Guide for Beginner Traders

Which currency pairs lead in foreign exchange trading volume rankings?

According to the Bank for International Settlements (BIS) 2022 survey data, the global foreign exchange market’s daily trading volume has reached a record high of 7.5 trillion USD. Among this enormous trading volume, the US dollar always maintains absolute dominance, followed by the euro, Japanese yen, British pound, Chinese yuan, Australian dollar, Canadian dollar, Swiss franc, Hong Kong dollar, and Singapore dollar.

For traders new to the forex market, choosing mainstream currency pairs with high trading volume is key to reducing risk and increasing trading success rates. These high-volume currency pairs not only offer strong liquidity but also tend to have narrower spreads, making it easier for beginners to find ideal buy and sell counterparts and stable entry points.

Master the three major currency pair types to find the right trading pairs for yourself

( Major currency pairs: the largest trading volume, best for beginners

Major currency pairs include currencies that contain the US dollar, and are the most frequently traded pairs worldwide. Due to the US dollar’s status as the global reserve currency, these pairs have extremely high liquidity, relatively mild price fluctuations, and are very suitable for beginners with lower risk tolerance.

The seven most popular major currency pairs in the forex market include:

• EUR/USD (Euro/US Dollar): the largest trading volume globally, accounting for 22.7%
• USD/JPY (US Dollar/Japanese Yen): second in trading volume, accounting for 13.5%
• GBP/USD (British Pound/US Dollar): approximately 12% market share
• USD/CHF (US Dollar/Swiss Franc): 5% of total trading volume
• AUD/USD (Australian Dollar/US Dollar): 5.4% of trading volume
• USD/CAD (US Dollar/Canadian Dollar)
• NZD/USD (New Zealand Dollar/US Dollar)

) Secondary currency pairs: cross combinations, suitable for advanced traders

Secondary currency pairs (also called cross currency pairs) refer to pairs that do not include the US dollar, or involve the dollar and less traded currencies. These pairs have relatively smaller trading volumes and less liquidity than major pairs but offer more diversification opportunities for advanced traders.

Common secondary pairs include the euro series (EUR/CHF, EUR/GBP, EUR/CAD, etc.), yen series (EUR/JPY, GBP/JPY, CAD/JPY, etc.), and other combinations like AUD/CAD, NZD/CHF.

Exotic currency pairs: high risk, high reward, operate cautiously

Exotic currency pairs consist of a major currency (usually USD) and emerging market currencies, such as USD/BRL (US Dollar/Brazilian Real), USD/MXN (US Dollar/Mexican Peso), USD/ZAR (US Dollar/South African Rand), etc.

These pairs tend to have lower trading volumes and less liquidity, with wider spreads and higher transaction costs. More importantly, exotic pairs are highly sensitive to political events, elections, and economic policy changes, which can cause sudden and sharp fluctuations. Beginners should avoid trading these pairs lightly.

Five popular currency pairs recommended: from most stable to most opportunistic

1. EUR/USD: the most liquid trading choice globally

Euro/US Dollar is the king of the forex market, ranking first with 22.7% of trading volume. The Eurozone and the US are the world’s largest economies, and this pair represents stable economic policies and ample market liquidity. With very low spreads, relatively mild volatility, and clear price movement logic, it is rarely affected by sudden events, making it the top choice for traders of all levels.

2. USD/JPY: clear trend, suitable for long-term holdings

US Dollar/Japanese Yen ranks second in trading volume globally, with a 13.5% market share. This pair often exhibits a clear trend direction, making it easier for traders to identify entry and exit points, especially benefiting long-term investors using trend-following strategies. Japan’s economy is closely linked to the US economy, and economic data and policy adjustments from both countries directly reflect in the exchange rate.

3. AUD/USD: strong gold correlation, high predictability

Australian Dollar/US Dollar accounts for 5.4% of forex trading volume. Australia is one of the world’s largest gold producers, and the AUD is highly correlated with gold prices. When gold prices rise, the AUD usually follows suit. This correlation makes price movements relatively predictable, with less chance of sudden, unpredictable volatility.

4. GBP/USD: large economy, abundant trading opportunities

British Pound/US Dollar accounts for about 12% of the global forex market. Both the UK and the US are major developed economies, and their exchange rates are influenced by macroeconomic indicators, central bank policies, and political events, creating a relatively stable trading environment with plenty of opportunities.

5. USD/CHF: safe haven, market volatility hedge

US Dollar/Swiss Franc is the fifth-largest currency pair globally, accounting for about 5% of the market. Switzerland is renowned as a financial center with a robust financial system and stable economy, making the Swiss franc regarded as a “safe-haven currency.” During global market turbulence or economic uncertainty, capital tends to flow into the Swiss franc for protection, making it an ideal hedge against risk.

How should beginners wisely choose forex currency pairs?

When faced with numerous currency combinations, beginners should filter based on the following three core dimensions:

First, prioritize trading pairs with high trading volume. High volume means ample buyers and sellers, narrower spreads, and more stable prices. When trading volume is low, there are fewer buyers and sellers, leading to more volatile prices, increasing difficulty and costs. Currencies issued by countries with stable monetary policies, low inflation, and ample gold reserves naturally attract more traders.

Second, focus on currency pairs with clear trends. Whether upward or downward, a well-defined trend makes price prediction easier. Beginners should gradually learn fundamental analysis, studying factors like GDP growth rates, unemployment data, inflation indicators, and central bank interest rate decisions, as these often determine the medium- and long-term direction of the currency.

Third, observe the volatility characteristics of currencies. Volatility refers to the magnitude of price changes within a certain period. High-volatility pairs carry greater risk but also offer higher potential returns. Traders can use technical indicators like the Simple Moving Average (SMA) and Bollinger Bands (BB) to assess volatility and find a balance between risk and reward.

The three mainstream methods of forex trading

Spot trading: actual currency delivery, suitable for immediate needs

Spot trading involves directly buying and holding actual foreign exchange, similar to exchanging currency at a bank for travel. This method lacks leverage, offers limited profit potential, and has fewer tradable currencies. Unless there is a real need for cross-border payments or travel, pure investment use is less common.

Futures contracts trading: leverage involved, higher threshold

Forex futures trading introduces leverage and margin mechanisms, where buyers and sellers settle at a predetermined price on a specified future date. This allows small capital to control large positions but also requires investors to deposit a certain margin, making it more suitable for experienced traders.

( CFD trading: the most flexible and popular

Contracts for Difference (CFDs) are currently the most common forex trading method. Investors do not need to purchase actual currencies but track price movements of currency pairs through contracts. This method offers flexible leverage (usually 1 to 200 times), low trading costs, and 24-hour market liquidity, making it ideal for beginners who want quick market entry.

Mastering the leading forex currency pairs by trading volume, understanding the differences among various currencies, and choosing the right trading method based on your risk preference will help you confidently start your forex investment journey.