If you’re learning forex, one of the first things you’ll hear is “trade the majors.” Major pairs are the most traded currency combinations in the market, and they form the backbone of retail and institutional forex activity. Before you pick a pair to practise on, remember that trading carries risk and this article is for education only — it’s not personalized financial advice.
What a currency pair is (base and quote)
Every forex quote shows two currencies: the base currency first and the quote (or counter) currency second. The price tells you how much of the quote currency you need to buy one unit of the base currency. For example, if EUR/USD is quoted at 1.1250, one euro costs 1.1250 US dollars. If you buy EUR/USD, you are buying euros and selling dollars; if you sell it, you are selling euros and buying dollars.
This “paired” structure matters because you always trade the relationship between two economies, not a single currency in isolation. A move in a pair can come from changes in either currency or from events that affect both.
Which pairs are considered majors
Major pairs are the currency pairs that include the US dollar (USD) on one side and a widely traded, developed-market currency on the other. The widely accepted list of seven majors is:
- EUR/USD (euro / US dollar)
- USD/JPY (US dollar / Japanese yen)
- GBP/USD (British pound / US dollar)
- USD/CHF (US dollar / Swiss franc)
- USD/CAD (US dollar / Canadian dollar)
- AUD/USD (Australian dollar / US dollar)
- NZD/USD (New Zealand dollar / US dollar)
You’ll also see the phrase “core majors” used by some traders to refer to the most liquid four (EUR/USD, USD/JPY, GBP/USD, USD/CHF), while AUD/USD, USD/CAD and NZD/USD are often described as commodity-linked majors because their economies are sensitive to commodity prices.
Why traders focus on majors
Majors are popular for several practical reasons. First, they tend to be very liquid: lots of buyers and sellers means orders get filled easily and bid-ask spreads are usually tighter. Tighter spreads lower trading costs, which helps short-term strategies like scalping or day trading.
Second, majors are covered heavily by financial news and economic calendars. When central banks change interest rates, or when major employment or inflation releases come out, analysis and headlines follow quickly. That abundance of information can make it easier to form a view about likely price behaviour.
Third, majors often show more predictable technical behaviour compared with thinly traded exotic pairs. Because they are traded continuously by banks, funds and retail traders, price patterns, levels and reactions to economic data tend to be cleaner and better studied.
How trading majors works — simple examples
A practical way to understand majors is through a couple of scenarios.
Example 1 — buying EUR/USD: Suppose EUR/USD is 1.1250 and you expect the euro to strengthen. You buy one standard lot (100,000 euros). If the pair rises to 1.1300, the quote has increased by 0.0050, or 50 pips. For a standard lot the pip value on EUR/USD is typically about $10 per pip, so a 50-pip move equals roughly $500 (before costs). If the market falls instead, losses work the same way in reverse.
Example 2 — safe-haven reaction: USD/JPY often moves when investors seek safe assets. If global risk aversion increases, the yen can strengthen and USD/JPY may fall. A trader who had been long USD/JPY would see losses as the pair drops, while someone short USD/JPY could profit.
Pips and lot sizes: A pip is the smallest typical price increment for many forex pairs (for most majors it’s the fourth decimal place; for yen pairs it’s the second). Lot sizes determine how much a pip movement is worth. Retail platforms let you trade micro, mini and standard lots so you can scale risk.
What influences the majors
Movements in major pairs are driven by a mix of economic data, central bank decisions, geopolitical events and market sentiment. Interest rate differentials between two countries are fundamental: higher interest rates in one economy can attract capital, strengthening its currency. Commodity prices also matter for commodity-linked majors; for example, rising oil can support the Canadian dollar, and higher metal prices can help the Australian dollar.
Session overlaps also affect activity. Liquidity tends to peak when London and New York trading hours overlap, which is why many big moves and tight spreads appear then.
Practical tips for trading majors
Before trading majors on a live account, spend time on a demo account to understand pip values, position sizing and how spreads and slippage affect outcomes. Use stop-loss orders to define maximum acceptable losses, and size positions so a single trade cannot threaten your account. Watch the economic calendar for major data releases that affect the pair you trade. Finally, practise both technical and fundamental analysis: chart patterns and indicators often work well on majors because so many market participants follow the same price levels.
Risks and caveats
Trading the major pairs does not remove risk. Liquidity can dry up in stressed markets, spreads can widen during big news releases, and slippage can occur when orders execute at prices different from those you see on your screen. Leverage magnifies both gains and losses; small percentage moves in the price can translate into large account swings if position sizing is aggressive. Correlation is another hidden risk: majors often move together (for example, EUR/USD and GBP/USD can share USD-driven moves), so holding multiple positions across pairs can concentrate exposure rather than diversify it. Always plan risk per trade, expect occasional losses, and avoid trading based on emotion or “gut” reactions. This article is general information only and not personalized advice.
Key Takeaways
- Major pairs always include the US dollar and the seven commonly traded majors are EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, and NZD/USD.
- Majors offer high liquidity, tighter spreads and abundant information, which can make them easier to trade compared with exotics.
- Understand base vs quote, pip value and lot sizing; practise with examples and a demo account before risking real capital.
- Trading carries risk — use sensible position sizing, stop-losses and stay aware that leverage, news and correlation can produce rapid losses.
References
- https://www.babypips.com/learn/forex/buying-selling-currency-pairs
- https://www.home.saxo/learn/guides/forex/the-major-forex-pairs
- https://www.cmcmarkets.com/en-gb/trading-guides/forex-currency-pairs
- https://en.wikipedia.org/wiki/Currency_pair
- https://www.oanda.com/us-en/trading/instruments/
- https://www.ig.com/en/trading-strategies/major-currency-pairs-190618
- https://www.forex.com/en-us/trading-guides/the-top-10-most-traded-currencies/