How it works
Volume concentrates in the seven majors because the dollar is on one side of roughly 88 percent of all forex transactions. Banks, central banks, exporters, and traders all need to swap into or out of dollars constantly, which keeps the order book deep and the spreads tight around the clock.
The seven majors
- EUR/USD: highest-volume pair on earth. Spreads from 0.6 pip on a Standard account.
- USD/JPY: dollar-yen, sensitive to US Treasury yields.
- GBP/USD: cable, more volatile than EUR/USD, gappy on UK news.
- USD/CHF: dollar-Swissie, classic safe-haven flow pair.
- AUD/USD: Aussie-dollar, sensitive to commodity prices and China.
- USD/CAD: dollar-loonie, sensitive to oil and Bank of Canada policy.
- NZD/USD: kiwi-dollar, smallest by volume of the seven, dairy and risk-on exposure.
Example
EUR/USD on a Tuesday at 10:00 London: bid 1.0850, ask 1.0856, depth of $100 million within 1 pip of mid. Same Tuesday on USD/TRY (an exotic): bid 32.40, ask 32.55, depth of $5 million within 50 pips of mid. Same time, same broker. The structure is just different.
Why it matters
Cost matters more than direction over a career. The tighter spreads and lower slippage on majors compound. A scalper or day trader who sticks to majors saves multiples of their annual return in execution cost versus the same edge applied to exotics.
