Major, Minor and Exotic
Trading Forex online always involves currency pairs. The multitude of currency pairs that exist can be classified into 3 main categories, namely: major, minor and exotic.
Before we move on to currency pairs, let’s first have a look at the 7 most popular, or most traded, currencies of the world with their respective ‘nicknames’ in trader jargon.
- USD (U.S. Dollar) – aka the “Greenback” or “Buck” because of its green colour.
- EUR (Euro) – aka the “Fiber” because of the polymer fiber used in the Euro banknotes.
- GBP (British Pound) – aka Sterling derived from “Sterling Silver”, a mixed metal with over 92% pure silver.
- CHF (Swiss Franc) – aka “Swissy” short for Switzerland
- CAD (Canadian Dollar) – aka “Loonie” because the Canadian dollar note has the image of the Loon (a bird)
- AUD (Australian Dollar) – aka “Aussie” short for Australian
- NZD (New Zealand Dollar) – aka “Kiwi” because of the bird which is native to New Zealand
What are Major Currency Pairs?
Major pairs are classified as major because they are the most popularly traded ones on a daily basis. All major pairs include the US Dollar since it is the world’s leading reserve currency and is the most traded one of all.
The 7 major currency pairs are:
- EUR/USD – Euro/US Dollar (aka “Fiber”)
- USD/JPY – Euro/Japanese Yen (aka “Ninja”)
- GBP/USD – British pound/US dollar (aka “Cable”)
- USD/CHF – US Dollar/Swiss Frank
- USD/CAD – Us Dollar/Canadian Dollar (aka “The Funds”)
- AUD/USD – Australian Dollar/US Dollar
- NZD/USD – New Zealand Dollar/US Dollar
What are Minor Currency Pairs?
Minor pairs are pairs which don’t include the US Dollar. They are otherwise known as cross-currency pairs. The most widely traded ones include the British Pound, the Euro and the Yen.
The 7 minor currency pairs are:
- EUR/GBP — Euro/British pound -aka the “Chunnel” reminiscent of the underwater channel tunnel that connects France to Britain
- EUR/JPY – Euro/Japanese Yen – aka “Euppy”, a mix of Euro and Jappy (short for Japanese)
- GBP/JPY — British pound/Japanese yen aka “Guppy” similar to “Euppy”
- GBP/CAD — British pound/Canadian dollar
- CHF/JPY — Swiss franc/Japanese yen
- EUR/AUD — Euro/Australian dollar
- NZD/JPY — New Zealand dollar/Japanese yen
What are Exotic Currency Pairs?
Exotic pairs are comprised of a major currency with a currency of a developing economy (such as Turkey or Brazil). Exotic Pairs are not traded as often as major or minor pairs.
The most popular exotic currency pairs are:
- EUR/TRY – Euro/Turkish Lira
- USD/HKD – US Dollar/Hong Kong Dollar
- JPY/NOK – Japanese Yen / Norwegian Krone
- NZD/SGD – New Zealand Dollar/ Singapore Dollar
- GBP/ZAR – British Pound / South African Rand
- AUD/MXN – Australian Dollar / Mexican Peso
What Pairs are best to trade?
It really depends on your trading style, appetite for risk and overall experience as an online trader. There is no best pair per se, but If you are a newcomer to forex trading it is advisable to stick to the major pairs until you become comfortable enough to trade minor and exotic pairs.
Exotic pairs can be said to be the most difficult to trade because they are not so liquid and spreads are much higher for them than the rest.
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