If you are exchanging Swiss francs for US dollars, for example, the currency pair is CHF/USD. The pair is the two currencies involved in your trade. Forex pairs are always involfed in currency trading.

Theoretically you could trade any two currencies of the world, but in practice most foreign exchange trading is limited to the currencies of the larger financial powers. This does not necessarily mean the biggest or most politically powerful countries. Switzerland for example is only a small country but is a major player in the financial markets because of the global importance of the Swiss banks.

There are 6 major forex pairs which between them account for 90% of the funds traded on the forex markets. These are:

- EUR/USD: the euro and US dollar.

- the British pound and US dollar, nicknamed Cable because it used to be synchronized on both sides of the Atlantic by a cable running under the ocean: GBP/USD

- the US dollar and Japanese yen: USD/JPY

- CHF/USD: the Swiss franc and the US dollar.

- USD/AUD: the US dollar and the Australian dollar.

- USD/CAD: the US dollar and Canadian dollar.

In the beginning it is best to stick with the majors. But some traders do get involved in other combinations of these major currencies or pairs that include other currencies such as the New Zealand dollar.

The most significant single currency is the US dollar and according to a 2007 study, is involved in 85% of trades. The euro is second at 37%. Next come the yen, pound, Swiss franc, AUD and CAD in that order. These add up to more than 100% because there are always two currencies in every trade. In case you were wondering.

What Is The Best Currency Pair For A Beginner?

Most experts advise beginning with the USD/EUR pair when you are just starting out in forex. Your costs will be lower because there is a lot of information about these currencies and the high liquidity results in a smaller spread.

Some of the other currencies have particular characteristics which make most newbies avoid them unless they have special knowledge. For example the value of the Canadian dollar is strongly influenced by the price of oil because Canada is an oil exporter. The Japanese yen can also be affected by the price of oil in the opposite direction because Japan is a large consumer and importer of oil.

The best thing to do when you are starting out is probably to take the EUR/USD market and stay with that for the first few months at least. Most new traders would choose the GBP/USD out of the major forex pairs for the second choice. You will not want to get involved in a lot of different currencies when you are starting out.

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