Many would not know the most liquid currency pair in the forex market. I always come across this problem with new traders who just joined the bandwagon. Most will start or being introduced to trade less liquid and high price movements such as GBP/USD, USD/CHF or even GBP/JPY. Sometime new traders are being introduced to a lower spread but technically challenging USD/JPY.
For any new traders out there who just know about FOREX market, I better suggest to you all to trade the most liquid currency pair, that is the EUR/USD. It is also dubbed as the 'Big Dollar' in the forex market. Why? Well the Euro are being use by one of the largest economic bloc, roughly the size equal to the United States in both population and total GDP. As of today Euro are being used by Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia and Spain. In the future even Turkey will be included.
EUR/USD pair has the most deep liquidity that the next most traded currency pair in the FOREX market, USD/JPY. In total market volume statistics, EUR/USD accounted for well over 28% of global daily trading volume, according to BIS. With this deep liquidity, the spreads for this currency pair normally offered less than 3 pips and as low as 0.9 pips. My forex broker, FXPRO offer a fixed spread of 1.8 pips for EUR/USD and as high as 5 pips during low trading volume usually occur only on early Monday trading hours (Brunei time) and every first Friday of the month.
The other major currency pair like USD/JPY are more technically challenging than trading the EUR/USD that sometime offered similar spread. The GBP/USD and USD/CHF usually moves in wide gaps than the Euro moving more than 30 pips during news break or after breaking or testing some technical levels. This behavior can easily hit stop loss technical level.
And as I just writing just now, if you are new to forex market...test drive with EUR/USD first and don't try to test and/or pick the fast moving currency pairs like the GBP/USD. But, the choice is yours...happy trading guys.
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