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brownsfan019

Major Pairs

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If you’re talking liquidity, spreads/costs & shipping thru retail, then the $INDEX main constituents will generally keep you safe:

 

EURUSD

USDJPY

GBPUSD (in that order)

 

Popular pairs out there would also fall under:

USDCHF

USDCAD

AUDUSD

EURGBP

 

You then got the cross instrument combination pairs which make up the Euro….British Pound….Jap Yen….Swissy etc

 

Ie:

GBPJPY

GBPCHF

EURJPY

EURCHF etc etc………

 

 

Again, depending who you use & their spread/size/cost deals, will impact on your aims & trade strategy intent.

 

If you’re in doubt regards costs, liquidity, key time zone exposure, sizings etc on your chosen instrument(s), just talk to your brokers & tell them what you’re looking to do.

 

If it’s a half decent shop they’ll have switched on reps available to talk you thru your objectives

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The 9 "Majors" are technically the:

 

EURCHF

EURGBP

EURUSD

EURJPY

GBPUSD

AUDUSD

USDCAD

USDCHF

USDJPY

 

And the "10th" that is being traded more heavily and gaining in popularity all over seems to be the GBPJPY. Roughly 5 pip spreads but HUGE movement and compared to the other spreads right now in the spot market with recent volatility its actually a bargain of a pair. A lot of $$ movement for a 5 pip spread.

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Typical spreads for EURO/USD should be under a pip now and this currency is the major of the majors. Traders like The Rumpled One love to trade inside the spread and I have been able to get regular fills of under a pip. So the fact that a load of retail brokers out there still charging 2 - 3 pips shows how the retail market still tolerates high spreads real well. ACM is charging 3 pips! That adds up to a lot of money if you are high frequency trading. If not it doesn't matter so much.

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From an Interbank perspective -

Majors against USD:

EURUSD

GBPUSD

AUDUSD

USDJPY

USDCHF (not so sure)

 

Majors Crosses:

EURJPY (narrow spread due to popularity in EBS)

GBPJPY

AUDJPY

 

Any pair against NZD has a wide spread due to the lack of liquidity.

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I had always believed that the majors were crosses with USD which equates to the available currency futures and the use of the USD as the standard currency up until the rise of the EUR recently. Below is Wikipedia's extract from the Triennial Central Bank Survey (December 2007), Bank for International Settlements.

 

8712d1228337700-major-pairs-wiki.gif

 

So the majors become EURUSD, JPYUSD, GBPUSD, CHFUSD, AUDUSD and, given that the large players are now trading EUR directly against JPY, EURJPY.

 

Other USD crosses might technically be majors (with reduced spreads) but you can see by % traded why the spreads rise dramatically away from EURUSD.

 

All others, GBPJPY, included must be crosses.

wiki.gif.bacc4cee1d389c4edc4905deba765522.gif

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Adding to it tlfx I did a "liquidity chart" by multiplying the percentages out to give "pair liquidity". The raw data is at the top. The information at the bottom shows how liquid the pair is compared with what I would consider the minimum tradable liquidity audusd.

 

I always laugh when people talk about trading nzdaud. Its a little like wanting to trade the lumber future - the trends look great but liquidity/slippage and in the case of lumber, lock limit costs are very very high. No offense if you insist on trading it of course :)

 

attachment.php?attachmentid=8724&stc=1&d=1228453931

5aa70e9e40a0f_LiquidityforPairs1.gif.455ffbe10b40742a0bb36cc363015508.gif

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just to add to kiwi's post.

 

below chart show estimated market shares of each pairs, summing to the indicated market share. also the relative liquidity to eurusd (eurusd as 1.00).

forexmkt.GIF.c0ab5a08171064f0b8e54d6c0f2a53cf.GIF

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