More than 50% of all trades in the Forex involve the US dollar in one way or another since it’s the most stable currency in the world.
In fact, EUR/USD is the most traded currency pair in the world; it accounts for about 30% of the total multi-billion dollar Forex turnover. This is not surprising since the economies of the United States and the European Union are the largest.
Traders prefer these currency pairs because their liquidity and hence trading conditions are better than other pairs.
Probably everyone would continue to trade only EURUSD if there was no need for diversification.
This is why traders also use other currency pairs. Moreover, their trading volume is correlated with the size of the economy of the corresponding countries.
Thus, the British pound, the Japanese yen, the Swiss franc, the Australian dollar, and the Canadian dollar will constitute the most traded currency pairs with the American dollar and the euro.
Flexibility in terms of position sizing is allowed by Contract for Difference trading, enabling traders to trade in smaller or larger increments.
What are the most traded currency pairs in Forex?
The ten most popular currency pairs include the major currencies, as well as several cross currency pairs.
The best currency pairs to trade by category:
- Among the majors in general – EURUSD;
- Among the minor pairs – EURJPY;
- Among the exotic pairs – USDHKD.
Why is the popularity of a currency pair important?
First of all, actively traded pairs possess high liquidity. If more people are interested in an asset, then it is easier to buy and sell.
The high liquidity of a currency pair, in turn, allows transactions with lower commission costs. Traders call them trading conditions.
Thus, the EUR/USD pair will generally have the best trading conditions:
The lowest spread;
The minimum commission for rolling open positions to the next trading day (swap);
No or reduced commission for opening a position;
Fast trade execution.
Here we should also mention the appearance of more readable candlestick charts (without gaps). This greatly influences the reading accuracy of all indicator types.
In addition to trading conditions, the popularity of a currency pair also affects its informational visibility:
All kinds of analysis and expert opinions;
predictions and alerts trades are published preferably for the most popular pairs;
Regular coverage of events in the media and magazines;
Most guides provide specific examples of major currency pairs;
It is often argued that the most traded pairs are also the most predictable. However, this fact is unsubstantiated and mostly based on guesswork.
The least traded pair
We have listed the most traded currency pairs, so let’s now identify the least traded ones.
Each list has its first and its last element. However, things are not that simple when it comes to currency pairs.
In theory, we can argue that SZL/VUV (the Eswatini Lilangeni/Vanuatu Vatu pair) must be the least traded pair in the world. The same can be said of hundreds of other particularly exotic pairs. However, it is not possible to determine exactly which is less traded.
These pairs showed the lowest trading volume at the time of writing.
Among the major pairs – NZDUSD;
Among the minor pairs – NZDCHF;
Among the exotic pairs – GBPHUF.
The prominence of a currency pair provides the best trading conditions. Therefore, to begin with, you better use this pair.
When choosing a pair, make sure to analyze its intraday activity. Some of them are only traded at a specific time of the day.