Forex major currency pairs, also known as the big three are the ones that are most often traded on the forex marketplace. These are the most widely traded currencies in the world. They include the U.S. dollar, the British Pound, and the Euro. These currency pairs have been trading for more than a century, so they have had plenty of time to become used by many traders. Here is a quick review of these popular currency pairs.
The U.S. Dollar and the British Pound are both valued against the Euro at this point in time. As time goes by, their values will either increase or decrease against each other. When you combine their strength with the weakness of other major currencies, the two currency pairs can offer high trading volume due to their ability to trade against each other. These pairs have a history of trading back and forth, but tend to take turns in which they do this most often. Their current trading volume is about $1.2 billion per day.
The Euro, U.S. Dollar, and the Japanese Yen are the other three major currency pairs that are commonly traded on the forex. Unlike the U.S. Dollar and the British Pound, which have a history of moving in opposite directions, these three currency pairs have the tendency to trade in different directions most of the time. They are valued together because of their strong performance, but tend to trade separately due to the smaller trading volume.
Traders are able to trade these currency pairs because of their relatively high liquidity. Their prices are not affected by factors like supply and demand, which means that they are less affected by volatility. The European union, for instance, has a low volatility level and very high liquidity, which attracts traders to it. This is what gives it the ability to attract large amounts of trading.
However, the same can’t be said about the yen and dollar. These two pairs show very low liquidity and very high trading volume, which make them a poor investment. In fact, they are not even worth investing in if you are a casual trader or hold a small amount of money in your account. Their price is affected by factors like supply and demand, which results in them having very volatile movements. In a market, they have virtually no liquidity.
The three currency pairs I just mentioned are the ones that show the highest liquidity. However, there are other factors affecting the forex markets that also increase their liquidity. For instance, if you have a long position on one of these majors, then you can expect to have that position closed before the period of high volatility ends. This gives you time to accumulate more capital for your next trade.
The next factor that increases liquidity is the US dollar and the Euro. The EUR/USD pair has the second highest daily liquidity behind the USD/JPY. This stands out because both of these currencies are highly correlated with one another and their values are strongly influenced by the US government. When a US federal government policy causes a EUR/USD pair to depreciate, a number of traders sell their EUR’s in order to take advantage of the drop in its value, driving down the price of the euro.
There is one other thing that effects the daily volume of currency trading and that is fundamental economic factors. For example, when interest rates are lowered, this has a significant effect on the value of both the US and European ducats. Economic news can have an effect on the trading value of all the major currency pairs simultaneously. It is important to remember that fundamental factors are always shaping the future behavior of the markets, so you have to pay attention to how economic news affects the daily volume of currency trading as well.