Forex is one of the biggest and most volatile markets in the world. It’s loaded with hundreds of currencies traded on a daily basis. Each day a new trader is stepping into the market with the hope to multiply their wealth. The traders get adequate options of currency combinations for trading. People use a bucket full of currencies in all corners of the world. With the popularity of forex trading, tons of currency trading platforms are coming into the scene. These platforms allow traders to trade in over hundred types of currency combinations. However, the best trading platforms actively trade a handful of popular currencies. In 2021, amidst various global events and economic factors, certain currency pairs stood out as the most actively traded. These currencies come from multiple countries and typically belong to the economic superpowers of the world.
What are Currency Pairs?
The foreign exchange market defines currency pairs as compiling the national currencies of two continents together to enable trading. The trader can join any forex trading platform to start currency trading. Both the currencies of a pair highlight their own rates on which the traders need to have their position basis. Every currency carries its own bid price and asks for the price. The bid price defines the maximum rate the buyer is willing to pay for the currency. While the asking price is the minimum rate, the seller is willing to charge for the currency.
Different Types of Forex Currency Pairs
Forex pairs are categorized into three major groups, which are as follows –
Major currencies: These are the most prominent currencies in the forex market. These currencies are most traded across different online trading platforms. Here are some of the major currency pairs – GBP/USD, EUR/USD, USD/CHF, and USD/JPY.
Commodity Currencies: These constitute currency pairs with a value closely tied to major commodities like iron ore, oil, coal, and more. Some of the major examples of commodity currencies are as follows – USD/CAD and AUD/USD.
Cross Currencies: Traders mostly trade US dollars in the forex market, but they do not include US dollars in cross currencies. Two of the most prominent cross currencies are as follows – EUR/JPY and EUR/GBP.
How To Choose The Best Currency Pair For Forex Trading?
Here are some points to consider before picking up a currency pair in forex –
Liquidity: This turns out to be a key factor when choosing the ideal currency pair. To unleash the maximum benefits as a trader, you must always pick a currency pair that you can easily buy or sell.
Price Stability: The forex market is highly volatile. So, before picking up a currency pair, analyze the economic health of the countries the currencies are linked to.
Predictability: Every trader must master the art of predictability. Credibility backed with knowledge can help you prevent major losses in the forex market.
Top Currency Pairs To Trade In The Forex Market
Here are our top picks for currency trading to earn good wealth. The beginners can pick any of the currency pairs and start their trading journey with any of the top forex brokers in the industry.
USD/JPY
Traders refer to it as “Gopher,” which combines the US dollar and the Japanese currency, Yen. It is one of the most popular currency pairs traded at a high volume each day. The accessibility of the US dollar and the prominence of JPY currency make this pair a highly popular trading option. This pair comes with high liquidity, which means the traders can buy or sell the pair in large volumes without fearing any loss due to fluctuations in rates.
EUR/USD
Termed “The Fiber,” this pair depicts the combination of the US dollar and EURO. Combining two of the most used currencies in the world. This pair comes from the two economic superpowers in the world. When it comes to the volume of trading, the Euro and USD are the most used currencies for forex trading. In foreign exchange trading, this pair is mostly preferred by all traders. It’s one of the most profitable currency pairs for forex scalping.
EUR/GBP
Popularly known as “The Chunnel,” this pair combines Euro and the British pound sterling. Although this forex pair has turned out to be more volatile in recent times, it still stands as a strong pair for trading. Most experienced and knowledgeable traders pick this pair to generate enormous wealth. With a minimum spread of 1.1 points and a margin rate of 3.3%, traders actively trade the EUR/GBP pair, making it one of the top traded forex pairs in 2021.
Conclusion
In 2021, the Forex market witnessed significant trading activity across various currency pairs. The top most traded currency pairs included the EUR/USD, USD/JPY, and EUR/GBP. These pairs attracted traders and investors due to their high liquidity, volatility, and influence from major economies and geopolitical events. However, it’s important to note that market conditions can change, and the ranking of currency pairs may vary over time. As a Forex trader, it’s crucial to stay updated on market trends and factors influencing currency pair movements.
