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It doesn’t matter where you live in the world; the idea that you can use forex exchange to make money in another country’s currency opens up a myriad of possibilities. There are top currency pairs that are traded on a regular basis. You should know that you can also find a nice profit trading lesser known currencies. This article will explain two different currency pairings so that you can see the differences.
Top Forex Exchange Pairs
The top currency pairs are usually with the USD or other G7 currencies. USD, GBP, EUR, NZD, AUD, JPY, and CHF are considered the G7 because their countries are the most stable economically. Examining the USD/CAD or EUR/USD to determine why you might invest in these pairs is helpful. You will notice that most of the time there is more volume and money being traded in these pairs. Forex exchange tends to stick with the pairs that have the most stability. It also has to do with the small pip movements which can make a lot of money with one or two pips of a change.
You might see the pair trade up for a time; with profits pulled out it will downtrend. In most recent months the USD has trended better in terms of value with the CAD. It has been in an uptrend as CAD news was not too good and the USD news was better. Things like this must be considered for forex exchange. The lesser pairs discussion will help you understand why the G7 or at least the G20 matches would be better for trades.
Lesser Known Forex Exchange Pairs
The USD/AED is a lesser known pair. You could even consider the DKK/THB to be a lesser pair. The reason is for the exotic currencies attached to these pairings. You have the USD which is considered a very strong currency, but with the AED it makes it a minor pairing. The USD/AED is very interesting to trade and some might consider it pegged although this information is hard to find. It always returns to a certain base line after a day or two of trades. It tends to suggest some manipulations by the central bank, companies, or the occasional trader. Since you have a flat line with little blips, it can be easy to trade forex exchange of this pair as long as you know when it is about to make an up or down trend. In recent months it has gained more notice so it has started trading a bit better in terms of larger movements and for a longer period of time.
The DKK/THB is the Danish Krone and Thailand Baht. These two forex exchange currencies are not as popular. They also tend to show a lot of volatility. You might think that volatility comes from too much interest such as too much volume and liquidity in a pair. It actually comes from economic instability, a lack of volume and money, as well as the day traders trying to get some profit quickly. It creates for some interesting trades, but a lot of risk.