The Forex market offers a great variety of different instruments for trading and the choice of one particular currency pair may be influenced by a wide range of factors, such as:
- Analysis capability and the least possible risks of force-majeure.
- Volatility (for instance, low volatile instruments are not recommended for intraday trading).
- The time of trading (different currency pairs may be active during the European, American, or Asian trading sessions).
- Spread value (it’s not recommended to trade currency pairs with large spreads).
All currency pairs can be divided into three large groups:
- Majors. These are the most popular Forex instruments consisting of the USD and currencies of other developed countries (USDJPY, EURUSD, GBPUSD, etc.).
- Crosses. These instruments are not as active as Majors and do not include the USD (AUDCAD, AUDNZD, EURJPY, etc.).
- Exotics. These are the least liquid pairs with large spreads, which are very difficult to predict. Exotics contain the USD and currencies of less influential countries (USDRUB, USDMXN, etc.).
Many traders prefer highly-liquid instruments (currencies of developed countries) with low spreads. These are really convenient currency pairs: they are suitable for traders with different experience and their trading costs are significantly minimized.
Every trader chooses a currency pair according to their trading strategy, experience, and attitude to risk. The leading Forex instruments among beginners are EURUSD, GBPUSD, AUDUSD, and NZDUSD, and experienced traders often choose in favor of EURUSD, GBPUSD, AUDUSD, NZDUSD, USDCHF, USDJPY, EURJPY, GBPJPY, and AUDJPY.