Introduction to Currency Pairs

Next, let’s go over the most commonly traded currency pairs.
There are three groups: the majors, the crosses and the exotics:

Major Currency Pairs

The “majors” are those currencies that are the major countries that are paired vs.

the U.S. dollar (plus their nick names in parenthesis):

EUR/USD – Euro vs. the U.S. dollar (the Anti-dollar)

GBP/USD – British pound vs. the U.S. dollar (Sterling, Cable)

USD/JPY – U.S. dollar vs. the Japanese yen (the Yen)

USD/CHF – U.S. dollar vs. the Swiss franc (Swissie)

USD/CAD – U.S. dollar vs. the Canadian dollar (Loonie)AUD/USD – Australian dollar vs. the U.S. dollar (Aussie)

NZD/USD – New Zealand dollar vs. the U.S. dollar (Kiwi or Kiwi dollar)

Currency Crosses

The “crosses” are those pairs that are not paired vs. the dollar such as:

EUR/CHF – Euro vs. the Swiss franc
EUR/JPY – Euro vs. the Japanese yen
EUR/GBP – Euro vs. the British pound
EUR/CAD – Euro vs. the Canadian dollar
EUR/AUD – Euro vs. the Australian dollar
EUR/NZD – Euro vs. the New Zealand dollar
GBP/CHF – British pound vs. the Swiss franc
GBP/JPY – British pound vs. the Japanese yen
GBP/AUD – British pound vs. the Australian dollar
CAD/JPY – Canadian dollar vs. the Japanese yen
AUD/JPY – Australian dollar vs. the Japanese yen
AUD/CAD – Australian dollar vs. the Canadian dollar
AUD/NZD – Aussie dollar vs. the New Zealand dollar
AUD/CHF – Australian dollar vs. the Swiss franc
NZD/JPY – New Zealand dollar vs. the Japanese yen
CHF/JPY – Swiss franc vs. the Japanese yen

Exotic Currency Pairs

The “exotics” are those pairs that are emerging economies rather than developed/industrialized nations. Here are a few of the more commonly traded exotics:

USD/TRY – U.S. dollar vs. the Turkish lira
EUR/TRY – Euro vs. the Turkish lira
USD/ZAR – U.S. dollar vs. the South African rand
USD/MXN – U.S. dollar vs. the Mexican peso
USD/SGD – U.S. dollar vs. the Singapore dollar

Note: the exotics are not the best place to begin as a trader. Start with the majors and crosses first. Then as you gain profitability with them, and then you might try the exotics later on.

Now that we know what the pairs are… when do they trade?

Currency Trading Sessions

Generally speaking, the sessions go as follows: The U.S. session starts around 8am EST and goes until around 5pm EST. The European session starts around 3am EST and goes until around 11am EST. The Asian session starts around 5pm EST and goes until about 4am EST. (Also, note that the trading week starts on Sunday evening around 5pm EST and goes through Friday at around 4pm EST. It trades 24 hours a day between those times and is closed for retail trading from Friday evening through Sunday evening.)

The European session tends to carry the most volume and volatility. The U.S. session produces the next biggest moves and volume. The Asian session will consist of lighter volumes than the previous sessions and tends to normally produce smaller movements. The first two sessions are usually when intraday trends form and the Asian session is when ranges are more likely to form.

Now, that’s all “generally speaking”. If you want to trade the pairs that will be the most active, then trade them when their banks are open during their business day. In other words, AUD/JPY will be more volatile in the Asian session than EUR/USD because when Asia is “open for business”, the European and U.S. banks are closed for business. Now it doesn’t mean that forex trading ceases in the EUR/USD during this period but it does mean that it won’t generally have the volatility of an Asian pair in the Asian session.

Note: EUR/USD is the most widely traded pair and therefore carries the absolute highest volume of all currency pairs. It makes up about 27% of forex trading volume. Next is USD/JPY at 13%, followed by GBP/USD at 12% of the total forex trading volume.