The most popular trading currencies in the world include the US dollar (USD), Japanese Yen (JPY), Euro (EUR), British Pound (GBP), Canadian Dollar (CAD), Swiss Franc (CHF) and Australian Dollar (AUD). Those in the forex trading market know that traders exchange currencies in pairs. Before investing in Forex, new traders must thoroughly understand the currency handling, values and the exchange process. It is not a market that one enters being ignorant or unprepared. MT4 download helps traders understand the seven major currencies in the world and how to effectively trade them considering the country’s economic status and the world and other factors that can affect their value.
The Australian Dollar in the Trading Market
Australia, being the 50th largest country in terms of population, is the 14th largest in terms of GPA. The Reserve Bank of Australia (RBA) takes stringent measures to keep the interest rates high and curb inflation amidst any global crisis. It achieves it due to the continent’s abundance of natural resources, geology and commodities. Therefore, it also controls the Australian currency used in Forex trading but has not made too many interventions in the market.
Understanding Currency Pairs
One among the most crucial aspects of trading forex is knowing the different currency pairs, including minors, majors and exotics. For example, if an FX wants to trade GBP/USD, it would pair US dollars with British pounds together crm for forex brokers as one unit. The pairing has a base or transaction currency, followed by a second currency, i.e., the counter or quote currency. The GPB is the transaction currency in the example above, and the USD is the counter currency.
Major Currency Pairs
These are some of the most traded pairs due to their high liquidity, popularity and value. The countries with these currencies have large economies that influence global shifts. Therefore, they are more liquid than other pairs. The seven major pairings include EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, and NZD/USD.
Minor Currency Pairs
These are the second most traded currency pairs in the market. They are also known as ‘crosses’. They have lesser liquidity than their major currency counterparts. It encourages traders to make foreign crypto exchange aggregator trades using these pairs to reduce their trading costs. Minor pairs include currencies from major countries without the US dollar. The pairings include EUR/GBP, EUR/JPY, GBP/JPY, GBP/CAD, CHF/JPY, EUR/AUD, NZD/JPY.
Exotic Currency Pairs
These are the most exclusive pairs of currencies that make up the forex trade market. They include the combination of major countries and those from emerging or developing economies. Although major currency pairs are popular, the exotic currency pairs differ in liquidity and provide opportunities to trade using unique strategies and actions. There are exceptions to this as a few exotic pairs are known for being paired with two emerging economies, such as TRY/RUB and NOK/TRY. Some of the most common pairs include AUD/NOK, CAD/SGD, CHF/SEK, EUR/TRY, GBP/CZK, USD/RUB.
What Traders Must Know Before Trading Exotic Pairs
Exotic pairs have less liquidity and higher volatility. Therefore, they suit traders to have a higher risk appetite. Traders can exchange these pairs through any brokers or platforms like Metatrader 4. Exotic pairs allow traders on the MT4 download platform to diversify their portfolios as they can invest in more volatile economies but get a chance to gain significantly through FX pairing strategies. Furthermore, these emerging market currency pairs offer higher interest rates, making them attractive. Scalping, day, swing, and position trading form the practical trading strategies that allow them to execute faster, with higher profits and lesser losses.