Normally, there is considerable difference in the values of two different currencies. This allows you to trade between the currencies. You can trade a higher denomination for a lower one and make profit utilizing the difference in the value of the currencies being traded. Though it is not easy to establish the difference of values in the currencies, one can understand it by comparing their values to the US Dollars. As most part of the planet employs US Dollars for international transactions, the USD can also be called the intermediary as far as trading in currencies is concerned. Let us look at some common currency pairs that are traded more frequently than others are.
European Dollar and American Dollar
Better known as EUR/USD or USD/EUR, the pair deals between the European Dollar and the American Dollar. The usage of the terms depends on the type of trading you are involved in. For example, if you are trading from European Dollar to American Dollar, it is known as EUR/USD. This is one of the most traded currencies in the Forex Market. This pair is taken up by the major brokers and conventional traders, as well as people trading from home as it offers more profits than the other currency pairs. Mostly, the online Forex traders use this pair as they can access the real time information about the fluctuations using one of the freely available Forex Tickers. The pair is highly volatile meaning it is good for real time trading and in the short run. One can trade the currencies several times a day similar to the day trading in shares, owing to the constantly changing values of the currencies.
British Pound and American Dollar
Based on how you are trading, this currency pair is referred to as USD/GBP or GBP/UDS currency pair. This is also one of the most commonly traded currency pairs. However, the British Pounds are more stable and hence the popularity of the currency pair falls behind the EUR/USD pair. Professional traders still keep stocks of these currencies as they prove fruitful in the long run. However, if you wish to rake in daily profits, then this is not the best currency pair to deal in. This may be considered more of an investment rather than real time Forex trading as it does not offer you to trade with it several times a day as is the case with USD/EUR.
Canadian Dollar and American Dollar
Depending on the type of exchange you are using, this set of currency is named CAD/USD or USD/CAD. Real time Forex traders across the world do not prefer this set. The reason for lack of interest in the trade between the Canadian Dollar and the American Dollar is the lack of volatility. Volatility of the currency pair is less because they are closely related and both of the countries stand next to each other. Still people in the North American Market can be found trading with this currency pair for better investments rather than making quick and many profits per day.
British Pound and European Dollar
This currency pair is known as EUR/GBP or GBP/EUR depending on the context of trading. A look at the statistics shows that people from the Europe are more interested in this currency pair in contrast to people from other planets of the world, who prefer the USD/EUR for its volatility.
Japanese Yen and Chinese Yuan
Finally, this is the JPY/CHY or CHY/JPY currency pair. A look at the statistics reveals that this trade is more popular with Forex of Asian traders. Others are, as usual more interested in the EUR/USD pair.
The above list is not exhaustive. There are plenty of more famous currency pairs. You may get forex trading software that can easily handle five or more pairs at a time so that you can rake in maximum profits.
