Major Vs Minor FX Pairs

Major Vs Minor FX Pairs (Vs Exotic)

What is a Major FX pair? What is considered to be an ‘exotic’ pair? Let’s find out!

Chances are – You’re logged on to this website from a country that uses a currency that is considered to be a Major. If not – A minor? And if you don’t fall within these 2 categories, then you use, what is considered to be, an exotic currency!

In this article we are going to take a look at the main Major FX pairs, then drop down a level to the minor currency pairs. And then finish by running through a few of the exotic currency pairs.

The 3 categories of currency pairs listed above will span right across the globe, reaching the far corners of the world. Let’s kick things off in our Major Vs Minor FX Pairs list, by diving deeper into the Major Currency Pairs!

Major Vs Minor FX Pairs: Major FX Pairs

Firstly – What does a currency need for it to be classed as a major currency? Well, this is a fairly straight-forward answer. These currencies are aptly named ‘Majors’ because they have the largest and most successful economies. Major economies!

And the currencies of the largest economies when combined with currencies of another country with large economic activity equate to a Major currency pair. These currency pairs are also the most traded and liquid pairs in the world.

How many Major FX pairs are there? Well, these pairs can be bunched up into certain groups. The 4 largest major FX pairs are:

• EUR/USD
• GBP/USD
• USD/JPY
• USD/CHF

Of these pairs – it is EUR/USD that comes out on top as the number 1 traded currency pair.

You can learn more about our ‘Top 5 Currency Pairs to trade’ here.

After the 4 largest major FX pairs, come the next group of pairs. These pairs are also considered to be major FX pairs and have strong links to commodities:

• AUD/USD
• NZD/USD
• USD/CAD

And for the most-part, that is it. Those are the 7 Major FX pairings. We say most-part as many people believe the list should be extended to include other ‘major’ crosses like EUR/GBP and EUR/CHF. These pairs still include one leg, of one of the major pairs – just without being quoted against the USD. These pairs are known as ‘Cross Currencies’.

Now lets start to really look at Major Vs Minor FX Pairs in our next section…

Major Vs Minor FX Pairs: Minor FX Pairs

Moving on from Major FX pairs – and onto our next tranche, the Minors.

Minor FX pairs are essentially the other larger pairings that are left, without a USD cross.

These currency pairs are also called ‘Cross-Currency Pairs’.

These FX pairs are typically traded less than Major FX pairs (hence the name) and these pairs are also usually slightly less liquid.

Let’s take a look at some of the most commonly traded minor FX pairs to give you an idea:

• EUR/JPY
• GBP/JPY
• EUR/GBP
• EUR/AUD
• GBP/AUD
• EUR/CAD
• EUR/NZD
• GBP/CHF
• GBP/NZD
• CHF/JPY

As you can see from the pairs listed, these currencies are all from large countries with large economies – However missing a USD leg – hence the cross currency definition.

That’s pretty much all we have to say on the subject of minor FX pairs and we can now look forward to the least liquid pairs of all – the exotics!

If you don’t want to venture down the Exotic FX pair road and you’re happy with our list of Major Vs Minor FX pairs and/or trading Major and Minor FX pairs – You can open an account here.

Major Vs Minor FX Pairs: Exotic Currency Pairs

Exotic currency pairs are the final piece of the FX pairings puzzle and last of the 3 categories of FX pairs.

Exotic FX pairs will usually be made up of a major currency, traded against an emerging market currency. Or a currency that has poor liquidity.

These pairs are traded on a much smaller scale than both Major FX crosses and Minor FX crosses. This is due to the illiquidity of these pairs and also the wider spreads that are commonly associated with these pairs.

So why trade exotic currency pairs? Well – because of the nature of the crosses, the illiquidity and the underlying countries involved, the upside potential can be quite large due to large price swings. So, the upside potential can be quite significant. But this comes with added risk which is something that all traders should bear in mind. i.e. – the downside potential is also significant!

Let’s take a look at some of the more popular Exotic currency pairs:

• USD/TRY
• USD/THB
• USD/ZAR
• EUR/TRY
• USDZAR

Major Vs Minor FX Pairs: Comparison Table

Major Vs Minor FX Pairs: Conclusion

Thank you for taking the time to read our list of Major Vs Minor FX Pairs – You should now have a solid understanding of what makes up a Major currency pair, how to define a cross-currency (Minor) pair and list a few characteristics of an exotic pair.

Now, where should you start in terms of your trading? This completely depends on each individual trader. If you’re based out of Turkey – then USD/TRY is probably a good place to start as you will have an understanding of the country’s economics and political situation.

If you’re in England – GBP/USD or EUR/GBP might be a good place to start. For the same reason as the Turkish Trader, with the added benefit of trading Major/Minor pairings.

If you’re looking to trade a currency pair with a tight spread and plenty of liquidity, then it’s fairly obvious by now that you should really be looking at minor and major FX pairs. But don’t think because there’s more liquidity or you’re trading pairs from developed countries, that you won’t experience large and erratic moves!

And if its large and erratic moves that you’re after and you don’t mind trading a pair with a wider spread for that opportunity, then Exotic currency pairs could be the route you need take.

Just ensure that whichever group of currency pairs you decide to trade, that you have a good understanding of the symbol, the platform you’re using and any relevant economic events that may affect the pairs you’re trading.

If our information on Major Vs Minor FX Pairs has been helpful to you and you’re looking to start your trading journey – Please click here to open an account today!

Good luck and happy trading!