There are many currency pairs to choose from as there are so many currencies in the world. However, Major currency pairs are the most popular ones by far. For instance the EUR/USD is the most traded currency pair, with the USD/JPY being also rather popular. Other ones that are also quite commonly traded include the GBP/USD and USD/CHF and USD/CAD.

However there are also minor and exotic currency pairs, like GBP/JPY, EUR/CHF AND USD/SGD. Do you stick to major currency pairs only or also trade minor / exotic pairs too?

Choosing whether to stick to major currency pairs or explore exotic ones in the foreign exchange market depends on individual trading preferences, risk tolerance, and market knowledge. Major currency pairs, such as EUR/USD and USD/JPY, involve currencies from economically stable countries, offering higher liquidity and lower spreads. This can be advantageous for traders seeking more predictable market conditions and lower transaction costs.

However, some traders are drawn to exotic currency pairs, which involve currencies from smaller or emerging market economies. Exotic pairs may offer higher volatility, presenting opportunities for significant profits. Yet, they come with increased risk due to lower liquidity and wider spreads. Traders must conduct thorough research and analysis to navigate the unique challenges associated with exotic pairs effectively.

Ultimately, the decision to stick to major currency pairs or diversify into exotics depends on individual trading goals, risk appetite, and experience level. Novice traders often find major pairs more straightforward, while seasoned traders may strategically include exotics to diversify their portfolios and capitalize on specific market conditions. Successful traders carefully consider the pros and cons of each option, aligning their choices with their overall trading strategies and objectives.