Liquid currency pairs on Forex: advantages of trading them
The term “liquid asset” is very often used when it comes to trading in financial markets.
In Forex, it is applied to currency pairs, and characterizes how popular and in demand this pair is among trading participants.
Liquidity in the classical sense is the speed at which you sell your asset at the market price, how in demand it is, how quickly a buyer is found and what it costs you.
Based on this, liquid currency pairs on Forex should be sold at record speed, but in reality everything is a little different.
The speed of order execution in the trader's trading platform is approximately the same, regardless of which pair you have chosen, but the spread commission for opening transactions is significantly different.
True, you should compare not only the commission indicator itself, but also the cost of a point in different currencies for the same transaction value.
These values are almost always different. That is, in our specific case, you sell your product (currency) at the same speed, but you pay a higher commission for the sale of less liquid assets.
It is the size of the spread that best characterizes which pair is currently the most popular. This is confirmed by the unprecedented widening of the spread on days when liquidity drops to almost zero, usually before the holidays.
The most liquid currency pairs on Forex
At the moment there are quite a lot of them, since the popularity of Forex trading is growing every day:
EURUSD Euro to dollar is the leader in popularity and, accordingly, in liquidity, the spread for this currency pair often drops to around 0, and its average size is around 2 points.
AUDUSD The Australian dollar against the US dollar is also a rather interesting trading instrument; the maximum trading volumes for it are recorded during the Australian Forex session.
EURGBP Euro to British pound – these two currencies are constantly trying to prove which of them is better, after Britain refused to enter the Euro zone.
The highest volatility is observed during the European trading session. GBPUSD British pound to US dollar is a traditional combination.
The currencies of the two countries with the strongest economies will always be in trend. USDJPY Dollar to Japanese yen - traditionally used by many traders to make money during interventions by the National Bank of Japan.
EURJPY Euro to Japanese yen – over the past few years, the pair has also gained considerable popularity in the foreign exchange market.
USDCHF US dollar to Swiss franc – the currency of Switzerland is classically considered a safe haven for investors, which is why EURCHF is also always in high demand.
These are the most liquid currency pairs that can be found in the trading terminal, but such combinations as USDCAD, USDCNH and EURCNY can also be included in this category.
You can read about all currency pairs in the section - http://time-forex.com/pary