The FX pairs
There are hundreds of currencies around the globe, which are often classified under three main groups, based on liquidity and popularity. These are the majors, minors and exotics.
Majors – The most liquid or most actively traded currencies.
Majors account for 85% of the total volume traded in currency markets. At ThinkMarkets, our spreads on majors are tighter than the spreads of minor or less traded FX pairs.
Minors – Not as heavily traded like the majors and often more volatile.
Spreads for minor pairs are also typically wider because of the medium sized market liquidity compared to the major pairs.
Exotics – Exotic FX pairs are traded more rarely.
Because of their low trading volume, the currencies are not considered liquid. They tend to be more costly to trade because of the wider spreads and traders add them to their trading due to their higher risk/reward profile.