In the world of forex trading, every transaction involves exchanging one currency for another, which is why currencies are always quoted in pairs. These pairs are categorized into three types: major pairs, minor pairs, and exotic pairs. Major pairs are the most traded and always include the US dollar alongside another leading global currency such as the euro, British pound, Japanese yen, or Swiss franc. Examples include EUR/USD, GBP/USD, USD/JPY, and USD/CHF. Because of their high liquidity, major pairs typically offer tighter spreads, faster trade execution, and more predictable price movements, making them a preferred choice for many traders, especially beginners. Minor currency pairs, also known as cross-currency pairs, exclude the US dollar and involve combinations like EUR/GBP, AUD/JPY, or GBP/CHF. While minors can provide profitable opportunities, they usually come with slightly higher spreads and less liquidity compared to majors, which can make them more challenging for new traders. For those just starting out in the foreign exchange market, focusing on major pairs is often recommended because they are easier to analyze, widely covered in market research, and generally more stable in terms of price behavior.
