Due to the decentralized nature of the Forex markets, it is always tricky to get the exact data for daily volumes for each of the trading pairs and CFDs. However, there is still some data available to indicate which pairs are most popular among FX traders. Let’s dive deeper into the world of FX trading volumes and define which are the most traded pairs and CFDs.
Understanding Forex pairs and CFDs — A Brief Intro
Forex markets consist of currency pairs where currencies from different countries are denominated against each other, enabling traders to speculate on a wide range of instruments. CFDs or Contracts for Difference, on the other hand, are contracts between traders and their financial institutions. Traders take positions in the future value of the asset, and the difference between the opening and closing prices of the CFD is settled in cash. CFDs offer extremely fast execution speeds and high liquidity, enabling traders to rapidly open and close positions. This efficiency results in lower spreads and commissions. Despite being more flexible, CFDs are considered riskier assets and the USA has restricted them. However, brokers regulated in other jurisdictions can freely offer CFDs to their clients. CFDs are especially useful when it comes to cryptos and stocks, as they allow traders to short-sell the asset right away. CFDs for Forex pairs offer the best of both worlds, fast execution, tight spreads, and low trading commissions, making it a suitable asset class for both beginners to experienced traders. Because of their complex nature, a step by step guide to learn FX trading for beginners is critical for ensuring beginner traders start their journey with proper theoretical and practical knowledge.
Most traded FOREX pairs and CFDs
Because finding the exact daily trading volumes for each of the top foreign exchange pairs is challenging, we chose to examine their popularity and liquidity instead. These factors directly indicate the pairs’ trading volumes. Major currency pairs are among the top traded pairs with their popularity and recognition across the globe. Many of the Forex brokers offer currency pairs in the form of CFDs, enabling them to offer tighter spreads and lower commissions to their clients.
EUR/USD
The EUR/USD remains the most traded currency pair, accounting for a significant portion of daily Forex trades, indicating that it has the highest trading volume. This information is solidified further as the pair has the tightest spreads and high liquidity. The pair benefits from the comic exchange and dynamics between the EU and the USA, making it a focal point for traders worldwide. By trading the EUR/USD major pair, traders can speculate on the economies of the USA and Europe. It makes up for 20% of the trading volume of FX markets.
USD/JPY and GBP/USD
The Japanese Yen and the UK’s pound sterling are super popular currencies among Asian and European traders. USD/JPY and GBP/USD are major pairs with deep liquidity and represent substantial day train volume because of their popularity. These pairs along with AUD/USD and USD/CAD are influenced by economic announcements, interest rates by their respective central banks, and geopolitical events. According to some online sources, GBP/USD makes up 13.65% daily volume of FX markets. The USD/JPY pair, for example, is significant due to its liquidity, as the yen has the status of the most heavily traded currency in Asia.
Gold and Oil
Gold is the most popular commodity, with its trading volume and significance as a hedge against a weak dollar. This status of gold asset enables it to attract traders across the world. Gold and Oil have decent volatility, providing many trading opportunities throughout the trading day. As a safe-haven asset during economic uncertainties, Gold is heavily influenced by geopolitical events, supply-demand dynamics, and global economic health.
Major indices and stock CFDs
Major indices and stocks such as CFDs allow traders to speculate on the overall market trends and the performance of individual companies without owning the actual assets. This provides superior flexibility to make money from both downtrends and uptrends with reduced capital requirements because of the high leverage on CFDs, despite being a riskier asset class.
