
What is minor pairs in forex?
In the world of forex, minor currency pairs, often referred to as "cross-currency pairs" or simply "minors," play a crucial role alongside major currency pairs. While major pairs involve the U.S. dollar (USD) as one of the currencies, minor pairs do not. Instead, they consist of two other major currencies, excluding the USD.
Minor pairs are typically composed of two major currencies from different countries, and they are valued relative to one another. Some of the most common minor pairs include the Euro (EUR) against the British Pound (GBP) (EUR/GBP), the Euro (EUR) against the Japanese Yen (JPY) (EUR/JPY), and the British Pound (GBP) against the Japanese Yen (JPY) (GBP/JPY).
Traders often turn to minor pairs when they seek diversification or have a specific view on the relative performance of two non-USD currencies. For instance, if a trader believes the Euro will strengthen relative to the British Pound, they might go long on the EUR/GBP pair.
Minor pairs tend to have lower liquidity and larger spreads compared to major pairs, making them slightly less attractive for high-frequency trading but potentially more profitable for those who can identify longer-term trends. Additionally, since these pairs aren't as actively traded as major pairs, they can be subject to higher volatility, presenting both opportunities and risks for traders.
Understanding minor pairs is essential for forex traders as they offer alternative avenues for diversification and speculation in the foreign exchange market. Traders need to be mindful of economic and political factors influencing the countries associated with the minor pairs they trade, as these can have a significant impact on currency values and market dynamics. Overall, minor pairs are an integral component of the forex market, providing a diverse range of opportunities for those willing to navigate their intricacies.
Minor pairs are typically composed of two major currencies from different countries, and they are valued relative to one another. Some of the most common minor pairs include the Euro (EUR) against the British Pound (GBP) (EUR/GBP), the Euro (EUR) against the Japanese Yen (JPY) (EUR/JPY), and the British Pound (GBP) against the Japanese Yen (JPY) (GBP/JPY).
Traders often turn to minor pairs when they seek diversification or have a specific view on the relative performance of two non-USD currencies. For instance, if a trader believes the Euro will strengthen relative to the British Pound, they might go long on the EUR/GBP pair.
Minor pairs tend to have lower liquidity and larger spreads compared to major pairs, making them slightly less attractive for high-frequency trading but potentially more profitable for those who can identify longer-term trends. Additionally, since these pairs aren't as actively traded as major pairs, they can be subject to higher volatility, presenting both opportunities and risks for traders.
Understanding minor pairs is essential for forex traders as they offer alternative avenues for diversification and speculation in the foreign exchange market. Traders need to be mindful of economic and political factors influencing the countries associated with the minor pairs they trade, as these can have a significant impact on currency values and market dynamics. Overall, minor pairs are an integral component of the forex market, providing a diverse range of opportunities for those willing to navigate their intricacies.
In forex trading, minor pairs are currency pairs that do not include the U.S. dollar but still involve other major currencies. These pairs are also called cross-currency pairs because they represent direct exchange rates between two non-USD currencies. Examples include EUR/GBP, EUR/JPY, GBP/JPY, and AUD/JPY.
Minor pairs are generally less liquid than major pairs, meaning they have slightly wider spreads and lower trading volumes. However, they still attract many traders because they provide opportunities to trade strong currencies against each other without involving the U.S. dollar. Price movements in minor pairs are often influenced by regional economic conditions, trade relations, and geopolitical events. Traders who follow global economic trends usually utilise minor pairs to diversify their strategies and capitalise on additional trading opportunities.
Minor pairs are generally less liquid than major pairs, meaning they have slightly wider spreads and lower trading volumes. However, they still attract many traders because they provide opportunities to trade strong currencies against each other without involving the U.S. dollar. Price movements in minor pairs are often influenced by regional economic conditions, trade relations, and geopolitical events. Traders who follow global economic trends usually utilise minor pairs to diversify their strategies and capitalise on additional trading opportunities.
Oct 19, 2023 07:13