The profits you get in every forex trading activity are greatly influenced by the international trading currency you choose. Not all international trading currencies are considered profitable, even though they have a relatively higher exchange rate than the rupiah. This is due to the influence of various factors, ranging from quantity, country conditions, and the influence of major currencies.

Therefore, you need to know more about which types of international trading currencies are the most profitable and why they are so popular among traders. In total, there are seven types of international trading currencies that are most often chosen when trading forex, here is the list.

  • US Dollar (USD)

It is not surprising that the US dollar (USD) is recognized as the most profitable international trade currency, considering that the United States itself is still the largest economic center in the world. This currency is also a benchmark for the exchange and movement of other currencies, such as the euro, yen, pound, and rupiah.

  • Euro (EUR)

Often considered a strong rival to the US dollar, the euro actually tends to be slower than other currencies. However, the euro's strength is unquestionable because it is regulated by the European Central Bank, which is headed by four of the five largest economies: Germany, France, Italy, Spain and the Netherlands.

  • Yen Jepang (JPY)

The Japanese currency is the most traded Asian currency. It is undeniable that the economic conditions in Japan are improving, as is the exchange rate of the Japanese yen. The value of the yen itself offers low interest rates, so it is often used by traders to carry trade. Carry trade is done by borrowing yen at a low price and using it to invest in a higher-yielding currency. The margin of both currencies is the profit earned.

  • Pound Sterling (GBP)

The pound is the fourth most popular international trading currency. The reason is, the exchange rate of the pound is so large, even exceeding the US dollar. This is influenced by the economic and political conditions in the United Kingdom. Because of its high exchange rate, the pound is also the main benchmark for several other countries and has a fairly high liquidity value.

  • Franc Swiss (CHF)

Regulated by the Swiss National Bank, the franc is one of the most stable international trading currencies. As such, it is often considered a neutral currency that is safe to trade. Thanks to Switzerland's trade relations with its European neighbors, the franc's value is heavily influenced by the euro.

  • Canadian Dollar (CAD)

Due to Canada's geographical position adjacent to the United States, the value of the Canadian dollar or commonly called the loonie is also greatly affected by the condition of the US dollar. Canada is also one of the largest crude oil exporters in the world, so it can be used as a material for speculation regarding the movement of crude oil trading activities or vice versa.

  • Dollar Australia (AUD)

The Australian dollar is the currency with the highest exchange rate and is closely related to gold, silver, and other mining commodities. The high exchange rate and its stable nature make this currency the choice of traders who have long-term plans.

Currency Pairs in Forex Trading

After knowing the nature of each international trading currency, now you need to know the right currency pair before jumping into the world of forex trading. There are two components in a currency pair, namely the base currency and the comparison currency (quote currency). The currency code on the left side is the base currency, while the currency code on the right side is the quote currency.

According to the characteristics of each currency pair, it is divided into three different categories, namely major currency pairs, cross currency pairs, and exotics currency pairs. Each has its advantages and disadvantages, depending on your strategy and understanding. However, the main principle in choosing a currency pair is to choose the one with the highest liquidity with a low spread.

Major currency pairs are the most popular choices. In this category, a currency is paired with the US dollar. An example is the most frequently traded pair of the euro with the US dollar (EUR/USD). Then there is also the US dollar with the Canadian dollar (USD/CAD).

Meanwhile, cross currency pairs include two international trading currencies other than the US dollar. Although the main currency pairs are considered more profitable, cross currency pairs such as EUR/JPY and GBP/JPY still have many enthusiasts.

Finally, there are exotic currency pairs. Currencies from developing countries are paired with the US dollar. Not many people choose to use exotic currency pairs because they have high spread values ​​with low liquidity. Some examples of exotic currency pairs are USD/ZAR (US dollar and South African rand) and USD/MXN (US dollar and Mexican peso).

Most Popular Currency Pairs

Overall, the US dollar is still considered the strongest international trading currency. This is proven by the emergence of the US dollar in every currency pair that is most often traded. Here are the five most popular currency pairs that you need to know.

  • EUR/USD

It is not without reason that this currency pair is so popular, of course because it comes from two regions with the largest economic influence, namely Europe and the United States. The large number of enthusiasts for this currency pair makes it have a high level of liquidity with a tight spread value, so attractive to traders who want to seek the greatest possible profit without great risk.

  • USD/JPY

Given that the Japanese yen is the most traded Asian currency, it is very suitable when paired with the US dollar which has a high exchange rate. Although it is included in the list of the most popular currency pairs, the USD/JPY currency pair is actually less stable and quite difficult to analyze its movement path.

  • GBP/USD

Although considered less stable, the GBP/USD currency pair is still in demand by many traders because of its high liquidity and relatively low spread. Therefore, it takes more capable analytical skills if you are interested in using this currency pair.

In carrying out trading activities using currency pairs, choose those with low volatility, especially if you are a beginner. Then, also consider the trading time, choose a currency pair that is active in the trading session to minimize losses. One more important thing is to continue learning to understand currency movements so that you are more confident in trading.

Visit GIC Indonesia to get information about the world of trading. You can also join us in the Telegram Community GIC Trade and Telegram Channel GIC Trade. Don't forget to check the Youtube account GIC Indonesia which is full of interesting information, and follow our Instagram account to get information about various interesting webinars that you can follow.