From Robin Lofton,
Your Guide to Forex Trading.
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The Major Currencies

Which Currencies to Trade?

What currencies should you trade? Remember, there are nearly 200 currencies available for trading every day. If you try to trade all these currencies or even half of them, you can go crazy. In other words, your trading efforts can become unproductive and unprofitable. Successful traders focus on a select number of currencies to trade. They become experts on their selected currencies by learning their history, trends, and sensitivities.

The Major Currencies

Most experienced traders focus on trading the major currencies. These currencies are known as “The Majors.” They have high trading volume and liquidity since they are often used by banks, governments, and multinational corporations for trade. The major currencies are also closely regulated by a strong and active central bank. Some of these currencies are also linked to major commodities. This commodity link increases their volume and liquidity. Finally, the major currencies are stable -- they’re not likely to disappear or suddenly lose their value following a surprise coup. With such high volume, liquidity, and political and economic stability, these major currencies have strong and reliable price movements and trends.

Currencies for Beginning Traders

The following list contains the major currencies on which beginning traders should focus. Once you’ve gained more Forex trading experience, you can expand your list to include currencies from emerging markets. However, every Forex trader can profitably and effectively trade only the currencies listed below. Remember, though, that currencies are traded in pairs so you must understand at least two currencies to trade effectively.

List of Major Currencies

• US Dollar (USD)
• British Pound (GBP)
• Euro (EUR)
• Swiss Franc (CHF)
• Japanese Yen (JPY)
• Australian Dollar (AUS)
• New Zealand Dollar (NZD)
• Canadian Dollar (CAD)

Read the list carefully. Choose 2 to 4 currencies to trade. Do your research.