What are the most traded currencies and which currency pairs should you look to trade? Lets take a look at the most traded currency pairs in more detail and look at which ones you should look to follow and trade.

Lets first start with the single currency which is the most traded on the planet, the most popular currency pairs to trade against it and the ones you should be looking to follow and trade.

The World's Most Traded Currency

The most trade currency by volume on its own is of course the US Dollar. The USD acts as the unofficial global currency reserve and is held by nearly every Central bank on the planet. The Dollar of course is traded in pairs with other currencies and speculators, will try and determine which side of the pair will weaken or strengthen and try and make a profit.

Most Traded Currency Pairs V USD

Lets now look at the most traded currency pairs and the two big ones are Dollar Euro and Dollar Japanese Yen. After the Dollar Euro and Yen the most traded currencies against the Dollar are: The British Pound, the Swiss Franc, Canadian and Australian Dollar.

Why the Above Currency Pairs are So Popular

The EUR/USD and USD/JYP are by far the most traded by speculators and this is because there the most volatile and also, they have the lowest transaction costs. While these pairs can be followed and traded for profit, just because they are the most popular currency pairs, doesn't mean they are the most profitable. Any currency can exhibit good trends but they occur at different times and you should be flexible in terms of the pairs you choose.

In terms of the other currency pairs we have mentioned, they will at some time offer opportunities to and keep in mind, if you are trading for speculative profits the transaction cost difference of a few pips, will have no real impact on your profit potential.

In conclusion, be prepared to follow the major currencies above against the US Dollar and don't, be tempted to just trade the two big pairs because you will restrict your overall profit potential.

Cross Rate Trading – Trading the Crosses for Profit

While many traders focus on the most traded currencies we have looked at against the US Dollar to make speculative profits, the smart trader also trades cross rates which are through the US Dollar which means you have a huge choice from the commonly traded EUR/JYP to less common ones such as the CAD/AUD.

If you trade crosses your transaction costs maybe higher but again, they should have little impact on your profits and because there is less speculative interest in the crosses, they can offer smoother trends than the majors. In Conclusion, always include some crosses in your mix of currencies to watch.

Most Traded Currencies - Final Words

Most traders assume, that if its the most commonly traded currency pair it must be the best pair for them to trade but this is not so, as we have seen above. You should trade the pair which offers you the best profit potential at the time. All currencies trend and they all trend at different times, so if you want to make big profits be flexible. Look to follow several pairs and if you do, you will enjoy bigger trading profits.