One of the most important things to understand when you want to enter the forex market is currency pair. There are several major currency pairs commonly traded by forex traders. A forex currency pair is the two different currencies in which you are doing the forex trading. Let’s say, you are trading US dollars for Japanese yen, then your forex currency pair is EUR/USD. In every currency trade there is a Forex pair involved.
In theory forex trading is possible in any two currencies listed on forex markets. Most of the forex software programs like FAP Turbo and currency trading systems like LMT Forex Formula supports various currencies. Though in real life most currency trading is done in currencies of the big powers like United States. This does not mean the largest or most politically powerful nations.
By big powers I mean the world’s leading economic powers. For example Switzerland is a tiny nation but is a key player in the fiscal markets because of the international significance of the Swiss banks. On the other hand though China is an emerging economic power, there is less demand for Chinese Yuan among forex traders.
Almost 90 % of the investments traded on the foreign exchange markets are done in nine key forex pairs.
Without doubt, the US dollar is the most important currency in forex market. According to a study conducted in 2007 approximately 84% of trades were in done in US dollars. The Euro is positioned in the second place with 37% of trading. You might be wondering why these numbers add up to more than 100%. This is due to the fact that there are always two forex currencies in every currency trade. The Japanese Yen, British pound, Swiss franc, Australian Dollar and Canadian Dollar are just behind US$ and Euro in the respective order.