Popular Forex Pairs Around the World

As far as popular Forex pairs are concerned it is really difficult to pin point the exact pairs because of changing nature of the economy, but still there are many pairs that are relatively strong as compared to other currencies. The most “liquid” currencies in the forex market are those of countries with low inflation, stable governments, and respected central banks. Nearly 85% of daily transactions involve the major currencies, including the U.S. Dollar, Japanese Yen, the European Union Euro, British Pound, Swiss Franc, and the Canadian and Australian Dollars. In other words, EURUSD, GBPUSD, USDJPY, USDCHF, AUDUSD, USDCAD are amongst the most popular pairs to trade around the world.

When dealing in the pairs, we should know what exactly “short” and “long” positions refer to. In simplest terms, short positions are taken when a trader sells currency in anticipation of a downturn in price. So, how that helps? Making this move allows the investor to benefit from a decline. Similarly, long positions are taken when a trader buys a currency at a low price in anticipation of selling it later for more. Making these moves allows the investor to benefit from changing market prices. So, we shouldn’t forget that since currencies are traded in pairs, every forex position inevitably requires the investor to go short in one currency and long in the other. That is the real crux of the story. That is the point where whole juice of this concept lies.

So, we have explained in the above-mentioned paragraphs regarding the most popular pairs and why they are the most preferred pairs. One of the most important factors is that the full range of economic and political conditions impact currency pricing. It is generally held that interest rates, inflation rates and political stability are top among important factors. At times, governments participate in the forex market in order to influence the traded value of their currencies. Not only just the economic and government factors, but other market factors also such as very large orders can cause extreme relative volatility in currency prices. The sheer size of the forex market prevents any single factor from dominating the market for any length of time. The resultant is the end result of these factors along with other factors (sometimes even unknown to the experts, as they are circumstantial in nature).

So, whenever we think about making profits, we need these popular pairs, which are relatively strong. In macro terms there are two kinds of factors that influence the decisions of currency traders: economic factors and fundamental factors. Absolutely there is no foolproof strategy that can be used as template as some of these factors are uncontrollable in nature. However, those who follow economic fundamentals use government issued reports, current news, and broad economic trends to anticipate movements in price.

On the other hand, technical traders primarily rely on trend lines, support and resistance levels, and a variety of charts and mathematical analysis to identify trading opportunities in the market. However, the most significant price movements occur in close association with unexpected and sometimes uncontrollable events. Perhaps the central bank changes rates without warning or an election puts an unexpected candidate in power. News (or even rumors) from conflicts certainly impacts currency pricing. More often than not, it is the expectation of a certain event rather than the actual event that drives price pressures. And hence the importance of these most popular pairs comes into play. These may or may not be of interest to everyone, but when it comes to the real professional and market experts, they know what that means and accordingly they take decision.

source: http://www.onedaytrades.com/articles