Minor Pairs in Forex

The enormous Forex marketplace allows retail traders and institutions to profit from the exchange. All accepted currencies are bought and sold in pairs — combinations of a “base” currency with a “counter” or “quote” currency. While the most conventional types are termed Forex majors, selections of less liquid pairs are regarded as “minors”. Here are the fundamentals of the latter.

Minor Currency in Forex Trading

Minor Currency in Forex Trading is most commonly, the combinations with EUR, GBP, CAD, AUD, NZD, CHF and the Yen, Excluding the US Dollar. This is because they are the other three most traded currencies. However, the definition varies between brokers, so make sure you clarify the term.

Generally, these combinations have only a modest share of the market. Unlike EUR/USD, they are less liquid and therefore offer fewer opportunities for profit. Their spreads are usually wider. However, the border between majors and minors is quite vague.

For instance, pairs like AUD/USD are fairly liquid. Some traders view them as majors, some as minors, and some as “Commodity currencies”.  On the other hand, EUR/JPY or EUR/GBP, which are also quite liquid, but do not involve the USD, are not always included in the ranks of minors.

Keynote: Forex Minor Currency Pairs are the pair which are most commonly traded excluding the US Dollar. They are the: GBP (British Pound), EUR (Euro), JPY (Japanese Yen), CAD (Canadian dollar), CHF (Swiss Franc), AUD (Australian dollar)
NZD (New Zealand dollar). They are also refered to as Cross-currency pairs.

Trading the Minor Forex Pairs

Not all brokers allow trading of this category. Such reluctance is justified by lower profitability for scalpers and certain types of traders.

Many of them choose to focus on commodity currencies and majors, whose spreads are tighter and volatility higher. Before delving into the practice of minor trading, examine your strategy to see if it is suitable for the less liquid pairs.

List of Forex Minors

Most often, 14 pairs fit into the class of FX minors. Check the exact classification with your intermediary. Here is the general list:

The Euro as a Base currency :

EUR/AUD — against the Australian dollar

EUR/CAD — against the Canadian dollar

EUR/CHF — against the Swiss franc

EUR/GBP — against the British pound

EUR/NZD — against the New Zealand dollar

EUR/JPY — against the Japanese yen

The British Pound as a Base currency

GBP/CHF — against the Swiss franc

GBP/CAD — against the Canadian dollar

GBP/AUD — against the Australian dollar

GBP/JPY — against the Japanese yen

Other Currencies as a base currency:

CHF/JPY — Swiss franc against the Japanese yen

AUD/JPY — Australian dollar against the Japanese yen

CAD/JPY — Canadian dollar against the Japanese yen

NZD/JPY — New Zealand dollar against the Japanese yen

 Nicknames of the Major & Minor Trading Pairs

USD (U.S. Dollar): “Greenback” or “Buck”.
EUR (Euro):“Fiber”
GBP (British Pound): Sterling
CHF (Swiss Franc): “Swissy”
CAD (Canadian Dollar): “Loonie”
AUD (Australian Dollar): “Aussie”
NZD (New Zealand Dollar): “Kiwi”

Trading Minor Pairs

The moderate liquidity causes broader spreads in comparison with the conventional pairs. For example, day trading and scalping may not be compatible with wider spreads.

On the other hand, those specializing in longer trends may find minors convenient.

Illiquid markets are associated with order slippage and less profitability for short-term traders overall. On the other hand, there may be considerable and consistent long-term trends determined by capital flowing into and out of the respective countries.

 

 

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