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A crash course in major, minor and exotic currency pairs

Are you just getting started with forex? Then you’ll definitely want to know what currency pairs are.

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In the forex market, you deal with two currencies at a time. For example, when you’re selling US dollars, you need to know what you’re selling it for.

Let’s say you’re selling dollars and getting euros in return. In that case, you’re trading the USD/EUR currency pair.

In forex, you’ll be talking about currency pairs a lot. Whether you’re trading JPY/EUR (Japanese yen and euro) or ZAR/MXN (South African rand and Mexican peso), currency pairs will dominate the discussion at every turn.

There are three types of currency pairs: major, minor and exotic.

Major currency pairs

Major currency pairs consist of the most frequently traded currencies globally. Because they have massive liquidity, you’re able to trade them virtually always. Furthermore, you’ll find the lowest spreads — or brokerage costs — when trading these pairs.

Major currency pairs include:

Currency pairs
EUR/USDEuro/US dollar
USD/JPYUS dollar/Japanese yen
GBP/USDBritish pound/US dollar
USD/CHFUS dollar/Swiss franc
USD/CADUS dollar/Canadian dollar
AUD/USDAustralian dollar/US dollar
NZD/USDNew Zealand dollar/US dollar

Notice that every major currency pair has the US dollar on one side. With good reason: The dollar is the world’s leading reserve currency, and it’s involved in about 88% of currency trades.

Minor currency pairs

When a currency pair doesn’t include the US dollar, it’s called a minor currency pair or a cross-currency pair.

Here are a few minor currency pairs:

  • EUR/GBP — Euro/British pound
  • EUR/AUD — Euro/Australian dollar
  • GBP/JPY — British pound/Japanese yen
  • CHF/JPY — Swiss franc/Japanese yen
  • NZD/JPY — New Zealand dollar/Japanese yen
  • GBP/CAD — British pound/Canadian dollar

The most widely traded minor pairs consist of the euro, yen or British pound.

Exotic currency pairs

An exotic currency pair includes a major currency and the currency of a developing economy (such as Brazil or South Africa). You won’t find exotic pairs as often as you’ll find major or minor pairs, which means the spreads can be higher when trading them.

Exotic currency pairs include:

Currency pairs
EUR/TRYEuro/Turkish lira
USD/HKDUS dollar/Hong Kong dollar
JPY/NOK Japanese yen/Norwegian krone
NZD/SGDNew Zealand dollar/Singapore dollar
GBP/ZARBritish pound/South African rand
AUD/MXNAustralian dollar/Mexican peso

Which pairs should I trade?

Picking the right currency pairs to trade depends on your experience as a forex trader. If you’re new to the game, it’s best to stick with the major and minor pairs — it’s easier to find trades and you’ll get lower spreads. Exotic pairs are more difficult to work with because they’re far less liquid and you’ll find higher spreads.

That said, it’s possible to make money with exotic pairs as long as you know what you’re doing. These pairs can be riskier, but they can pay off more significantly.

Bottom line

The more widely traded a currency is, the easier it will be to trade and the lower spreads you’ll find. Learn more in our guide to foreign exchange.

Frequently asked questions

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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