Understanding Currency Pairs: Major, Minor, and Exotic Explained 

Foreign Exchange market or Forex market is a global market for currencies trading. In the Forex market buying and selling of currencies is involved.  

Let’s start to know more about Currencies involved in Forex market trading. So here is a detailed explanation of trading Currencies Pairs: 

Basically currency pairs are categorized into three criteria – Major currencies, Minor currencies and Exotic currencies. 

What is Currency Pairs ?

In the forex market, each currency pair consists of the value of one currency relative to another and the first currency is known as base currency and the second currency is known as quote currency. 

Some examples of Currency Pairs are, in the pair USD/JPY (US Dollar/Japanese Yen), the first currency (USD) is the base currency, and the second (JPY) is the quote currency. If USD/JPY = 1.10, it means 1 USD equals 1.10 JPY.

Types of Currency Pairs 

There are three types of Currencies Pairs, as follows :

1. Major Currency Pairs

Major Currencies Pairs have a larger part in world’s strongest economies as these pairs are the most traded currency pairs in the Forex market. The US Dollar (USD) acts as either the base or quote currency. 

 Due to high predictability and stability many FX signal providers mainly focus on these currency pairs.

Examples:

• AUD/USD (Australian Dollar/US Dollar)
• USD/JPY (US Dollar/Japanese Yen)
• USD/CAD (US Dollar/Canadian Dollar)
• USD/CHF (US Dollar/Swiss Franc)
• EUR/USD (Euro/US Dollar)

2. Minor Currency Pairs

These pairs do not involve the US Dollar. These currency pairs are also known as cross-currency pairs. Minor Currency Pairs have wider spreads different from major currency pairs. The liquidity is also less as compared to the major pairs. 

Examples:

• GBP/JPY (British Pound/Japanese Yen)
• CHF/JPY (Swiss Franc/Japanese Yen)
• EUR/GBP (Euro/British Pound)

3. Exotic Currency Pairs

Exotic Currencies Pair is a combination of one major currency and other currency from a small economy. Exotic Currencies pairs are more riskier than other ones. These pairs have wider spreads and higher volatility. These pairs being riskier can also be profitable when traded with accuracy and strategically with trading signals or gold signals.

Examples:

• USD/ZAR (US Dollar/South African Rand)
• USD/TRY (US Dollar/Turkish Lira)
• EUR/SEK (Euro/Swedish Krona)

Currency Pair Trading with Forex Signals 

Whenever traders are in a dilemma of when to buy or sell , Forex signals like gold signals , exotics or major currency pairs help the traders to decide when to sell or buy. From FX signal provider accurate signals can beneficially improve trading results as it identifies the entry and exit points. 

Choosing the Right Currency Pair depends on :

• What are the Trading goals : Exotic pairs are riskier therefore these pairs are good for expert traders who are looking for high risk opportunities. While major pairs are more stable so they are good for newcomers.
• High liquidity : Major pairs are good for large volume trading due to its high liquidity need. 

Conclusion

Education, accuracy knowledge, proper strategies about currency pairs are the key factors for any trader to gain profit in the Forex market. To make your trading successful try to hire an accurate and transparent FX signal provider who can focus more on major currencies with high liquidity and minor currencies with diversification and with riskier exotics.