(Note: See Most Traded Currency Pairs for up-to-date info) The question comes up a lot as to what the most actively traded currency pairs are. A lot of forex traders end up responding based on what they think people trade most without necessarily knowing the statistics. Well, now you can be educated on the subject because I’ve got some data to share with you based on official figures (as of October 2008). This information comes from Forex volume survey,Â Forex volume survey,Â a presentation compiled byÂ a former colleague of mine (originallyÂ posted on Kathy Lien’s website – at least that’s where I saw it).
Here are the highlights.
London is by far the most active trading center, handling something close to $1.5 trillion in flows per day on average. It does roughly twice what second place NY does, with NY being a little higher than the Sydney/Signapore combined total. (Note: Tokyo was not included in the study, nor was anything from the Europen Continent).
The spot forex market is not the largest component of forex trading, despite what you might have heard. It’s actually the swap market which is the largest part. Given that most forex trading is actually related to international trade and capital flows, this really shouldn’t come as a surprise. Interestingly, though, spot trading is by far the biggest part of forex trading in the NY market.
In NY trading, EUR/USD accounts for about a third of all forex action. USD/JPY is about 20%.Â The trio of EUR/JPY, GBP/USD, and USD/CAD make up the rest of the pairs accounting for 75% of the trading activity on average.
EUR/USD is actually more like 40% of London trading. USD/JPY is still in second position, but at a lesser amount than in NY trading (call it 15%). GBP/USD is slightly less than USD/JPY. The group of EUR/JPY, EUR/GBP, and USD/CHF make up the rest of the top 75%.
Not surprisingly,Â AUD/USD is the biggest pair tradedÂ in Sydney (about 25% share), but EUR/USD and USD/JPY are the next two most active pairs, and in Signapore they are also 1/2 as they are in the rest of the world.
So the bottom line is that EUR/USD and USD/JPY are the two most actively traded currency pairs in the forex market. GBP/USD is third, with EUR/JPY generally forth.
I encourage you to check out the report, and if you are day trading check out the data for the trading center that’s the focal point for when you are in action. It might help you better find good trading opportunities. Of course, this isn’t to say that the lower volume pairs aren’t worth trading either. It just depends on your needs.
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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
** See John’s full bio.