Forex majors are the most popular and important currencies in the Forex market. Majors are the most frequently traded currencies around the world, and as most investors want to trade those coins, they have massive liquidity. You can trade forex majors virtually always with instant results.
When you are trading Forex majors, your costs are lower than other pairs as the liquidity that those pairs offer is high compared with other currencies called minors or exotics. For example, you will pay less spread while trading Euro to dollar than exchanging pound to yen.
That being said, Forex majors respond to their characteristics and reacts differently to every technical or fundamental event. Let’s talk about Forex majors pairs.
What are the forex majors
Forex majors are eight of the most valuable currencies around the world. Majors include the American Dollar, the Euro, the British pound, Japanese yen, the Swiss franc, the Australian dollar, the Canadian dollar, and the New Zealand dollar.
When those currencies are exchanged between themselves and the dollar, it is a major pair. For instance, the euro to dollar, the pound to dollar, the yen to USD, the USD/CHF, or the AUD/USD are major pairs.
You may have noticed that almost all majors pairs are dollar-related. There is a reason for that: the dollar!
As Bitcoin is the king of cryptocurrencies and gold is the standard for commodities, the dollar is the ruler for currencies. It is considered a safe haven, the global money reserve, and the most exchanged note around the world.
So, it is natural that every major pair is linked to the dollar.
Now, a major currency that is traded to another one, but the dollar is not involved it is called a minor pair. But we are going to talk about that later.
How to trade Forex with majors
It is complicated to say which is the best pair to trade Forex because every pair has different characteristics that fit with every person. So, the best pair is the one who fits with your trading style.
In Forex, it is better to select one pair and understand every aspect of the unit. What affects it the most, how it typically reacts, and what is the best time to trade it.
Euro to Dollar (EUR/USD)
The EUR/USD is the most popular currency pair and it also has the lowest spread across forex brokers. The Eurodollar is a stable pair with moderate volatility. In the case you are a conservative trader you may want to trade EUR/USD. It provides good swings, answers to fundamental news, and excellent behavior in technical analysis matters all around the clock.
Dollar to Yen (USD/JPY)
The USD/JPY is another low spread pair that has temperate trends and moderate swings. Experts believe there is a connection between the dollar-yen and the US Treasury. USD/JPY is popular too and provide a stable source of trading opportunities.
Pound to Dollar (GBP/USD)
The British pound against the dollar (GBP/USD) is a pair with more volatility than the other majors. It is highly active in the European session and American morning. Due to its volatility, traders usually take it for short term strategies.
Swiss Franc to Dollar (USD/CHF)
The Swiss Franc is one of the more stable majors in Forex. That means that people who trade USD/CHF wants to have regular profits, but not too much risk as the pair doesn’t have too much volatility. As Switzerland is a neutral country with a stable economy, CHF can be considered as a safe haven. The USD/CHF has a negative correlation with the EUR/USD.