Understanding Forex Pairs: Major, Minor, and Exotic

[Antho]

The three types of forex pairs are major, minor, and exotic. Major pairs offer significant liquidity and include actively traded currencies like the EUR/USD. Minor currency pairs contain major currencies but do not include the US dollar. Emerging market currencies are a part of exotic pairs, which are distinguished by their increased volatility and lesser liquidity. Having a thorough understanding of these categories enables traders to diversify their holdings and make wise trading choices.

 

[stoch]

The three types of forex pairs are major, minor, and exotic. Major pairs offer significant liquidity and include actively traded currencies like the EUR/USD. Minor currency pairs contain major currencies but do not include the US dollar. Emerging market currencies are a part of exotic pairs, which are distinguished by their increased volatility and lesser liquidity. Having a thorough understanding of these categories enables traders to diversify their holdings and make wise trading choices.

Thanks and what's your advice about best pair for trading? It seems that EURUSD is great in terms of transaction costs, but what about cross-pairs? Are they more predictable?

 

[Antho]

Thanks and what's your advice about best pair for trading? It seems that EURUSD is great in terms of transaction costs, but what about cross-pairs? Are they more predictable?

I guess the predictability of cross-pairs in forex trading is not necessarily tied to transaction costs.

 

[stoch]

I guess the predictability of cross-pairs in forex trading is not necessarily tied to transaction costs.

Why is so? I thought that if transaction costs are high, less traders are winning to participate to trading and decreased liquidity increases chances of sharp movements in either side.

 

[Starlin]

In forex, some major pairs are EURUSD, USDJPY, GBPJPY etc. And some exotic pairs are USDTRY, EURMXN, USDZAR etc.

 

[Oscar_0]

The three types of forex pairs are major, minor, and exotic. Major pairs offer significant liquidity and include actively traded currencies like the EUR/USD. Minor currency pairs contain major currencies but do not include the US dollar. Emerging market currencies are a part of exotic pairs, which are distinguished by their increased volatility and lesser liquidity. Having a thorough understanding of these categories enables traders to diversify their holdings and make wise trading choices.

Yes, classifications of these currencies really help us make our portfolios and diversify risks.