Key Takeaways
- FX is the largest market in the world, but 80% of its volume sits in fewer than ten currency pairs.
- Learning what each major actually represents — and why traders gravitate to specific pairs at specific times of day — is the foundation of every FX strategy.
The foreign exchange market trades around USD 7.5 trillion per day — larger than every stock market on the planet combined. But the headline number hides a useful truth: the vast majority of that volume sits in fewer than ten pairs. Learning these is most of the work.
Why "pairs" at all?
You cannot price a currency in isolation. The price of one euro is meaningless until you specify "one euro priced in what?" A currency pair quote is the ratio of one currency to another. EUR/USD = 1.0850 means one euro is worth 1.0850 US dollars at that moment.
The first currency in a pair is the base; the second is the quote. When you go long EUR/USD, you are simultaneously buying euros and selling dollars. When the rate rises from 1.0850 to 1.0900, the euro has strengthened by 50 pips against the dollar. The trade is always relative.
The seven majors and what drives each
The "majors" are the seven pairs that include USD on one side and a major freely-floating currency on the other. They account for roughly two-thirds of all FX volume.
EUR/USD — the world's most-traded pair
The single largest market on earth. Most-liquid, tightest spreads, deepest order book. Driven primarily by relative interest rate expectations between the Federal Reserve and the European Central Bank, and secondarily by growth and inflation differentials. The pair every new trader should start with, because execution costs are smallest and the price action is the most well-studied.
USD/JPY — the rate-differential pair
Sensitive to US Treasury yields and to the Bank of Japan's policy framework. Historically traded as a risk-on / risk-off proxy: when global equity markets sell off sharply, JPY tends to strengthen as Japanese institutions repatriate capital. Liquidity is concentrated in the Tokyo and London sessions.
GBP/USD — "cable"
Nicknamed cable because pre-WWII rates were transmitted across a transatlantic telegraph cable. Higher-volatility than EUR/USD, sensitive to UK economic data and Bank of England communications, and historically prone to sharp moves around UK political events. Best traded during the London session overlap.
AUD/USD, NZD/USD, USD/CAD — the commodity currencies
The Australian, New Zealand, and Canadian dollars are loosely correlated with global commodity prices and risk sentiment. AUD/USD trades with iron ore and Chinese growth indicators; NZD/USD with dairy prices; USD/CAD with crude oil (inversely — when oil rises, USD/CAD typically falls because the Canadian dollar strengthens). These pairs are quieter outside the Asia-Pacific and US sessions.
USD/CHF — the safe-haven inverse
The Swiss franc is one of the few currencies that strengthens during global stress. USD/CHF is therefore often (but not always) inversely correlated with EUR/USD and with global equity indices. Liquidity is reasonable but spreads tend to be wider than EUR/USD.
The "minor" or cross pairs
Cross pairs are FX pairs that do not include the US dollar. The most-traded crosses are EUR/GBP, EUR/JPY, and GBP/JPY. They are useful when:
- You have a specific view on the relative strength of two non-USD currencies that you do not want diluted by USD movements.
- You want to express a regional thesis (e.g. a view on European economic divergence via EUR/GBP).
Spreads on crosses are wider than on majors, and execution slippage during low-liquidity sessions can be meaningful. Treat them as pairs you graduate to, not pairs you start with.
The three trading sessions and when they overlap
FX is the only major market that genuinely trades 24 hours, but volume is not uniform. There are three regional sessions:
- Tokyo (approximately 00:00–09:00 GMT) — best liquidity in JPY pairs and the commodity currencies. Quietest session for EUR and GBP pairs.
- London (approximately 08:00–17:00 GMT) — the largest single session by volume. EUR, GBP, and CHF pairs all see their best liquidity here.
- New York (approximately 13:00–22:00 GMT) — second-largest by volume. The 13:00–17:00 GMT London/New York overlap is the highest-liquidity window of the day, with the tightest spreads on every major.
If you are choosing one window to learn FX in, the London/New York overlap is the answer. Spreads are tightest, news flow is heaviest, and the technical setups that work elsewhere tend to be most reliable here because the genuine order flow validates them.
What pip values actually look like
A pip on most pairs is the fourth decimal place (1.0850 → 1.0851 is one pip). On JPY pairs it is the second decimal (110.50 → 110.51). On a 1 standard lot (100,000 unit) position:
- EUR/USD: 1 pip = USD 10
- GBP/USD: 1 pip = USD 10
- USD/JPY: 1 pip ≈ USD 9 (varies inversely with the exchange rate)
- AUD/USD: 1 pip = USD 10
- USD/CAD: 1 pip ≈ USD 7.50 (varies with the exchange rate)
The platform calculates these for you in real time. The reason to know them by heart is that position-sizing maths happens in your head, not in a spreadsheet, when a trade setup appears.
One pair, learned properly
For someone starting in FX, the realistic path is to pick one pair — almost always EUR/USD — and trade only that for at least three months. Learn its typical daily range. Learn how it behaves around the London open, the New York open, the 8:30 AM US data window, and the Asian open. Learn which technical levels it respects and which it ignores.
The trader who knows EUR/USD properly has a tradable edge. The trader who knows ten pairs vaguely has noise. The majors are not a buffet; they are a curriculum, and the order of the curriculum matters.
This article is general educational information about the FX market and does not constitute personal advice. CFDs are complex leveraged products and carry a high risk of losing money rapidly. Pip values, spreads, and session timings are indicative.
