There are hundreds of different currency pairs and crosses that can be traded. Major currency pairs or majors represent the most liquid pairs and widely traded.
These include the EUR/USD, USD/JPY, GBP/USD, and USD/CHF.
The reason for the popularity in these trading pairs are obvious, given they include currencies of some of the world’s most important economic centers.
Additionally, these currencies comprising majors also constitute a significant share of global economic transactions.
The US dollar, euro, Japanese yen, British pound, and Swiss franc are all amongst the top traded currencies worldwide.
The EUR/USD alone is the world's most widely traded currency pair, representing approximately 20% of all foreign exchange transactions.
Why Retail Traders Prefer Majors
Majors are a ubiquitous offering amongst retail forex brokers and represent their most traded currency pairs.
They are the most liquid and also usually possess the lowest spreads during normal trading periods.
This differs from exotic pairs, which typically have lower volume or liquidity and thus have higher spreads.
Majors trade engage in high volumes relative to minor or exotic pairs, which means that traders can seamlessly enter and exit the market, even with large position sizes.
Another advantage of trading majors is the reduction in slippage that traditionally occurs with such trades.
High volumes equate to higher numbers of traders willing to buy or sell at a given time.
Consequently, there is a reduced chance of or smaller amount of slippage, which is an extremely sensitive issue amongst retail forex traders.
These factors in turn ensure that majors are amongst the most traded currency pairs, especially in the retail space.
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