What is traded in forex is a simple question with a slightly surprising answer. You are not buying banknotes or any physical object. Instead, you trade the exchange rate between two currencies, such as the euro and the US dollar. Every trade is a bet that one currency will strengthen or weaken against another, and you open and close it with a click on a forex platform.
This guide explains how currency pairs work, how majors, minors and exotics differ, and which other instruments forex brokers usually offer alongside currencies. Understanding what is traded in forex also helps you judge costs and risk, because each type of instrument behaves differently. For example, a major pair and an exotic pair can carry very different spreads, even at the same broker.
Currencies Trade in Pairs
In the forex market, every currency has a price in terms of another one. For example, EUR/USD shows how many US dollars one euro costs. The first currency is the base, and the second is the quote. If you buy EUR/USD, you buy euros and sell dollars at the same time. If you sell it, you do the opposite.
The rate itself reflects how the market sees each economy. Broadly, a currency tends to strengthen when its economy looks healthy and interest rates are attractive. Conversely, it tends to weaken when growth slows or a crisis hits. That is why traders watch central bank decisions, inflation and employment data so closely.
Because no physical exchange takes place, retail traders deal in contracts that follow these rates. Your broker handles the underlying exchange, and your profit or loss is simply the change in price multiplied by your position size.
What Is Traded in Forex: Majors, Minors and Exotics
Major pairs
Traders buy and sell some currencies far more actively than others. Most traders call these the major currencies, and they are the most liquid in the world. They include:
- The US dollar (USD)
- The euro (EUR)
- The British pound (GBP)
- The Japanese yen (JPY)
- The Australian dollar (AUD)
Most lists also add the Swiss franc, Canadian dollar and New Zealand dollar. A major pair combines one of these currencies with the US dollar, for example EUR/USD, GBP/USD, USD/JPY and AUD/USD. Majors normally have the tightest spreads and the deepest liquidity. According to the Bank for International Settlements Triennial Central Bank Survey, the US dollar sits on one side of the large majority of all forex trades.
Minor pairs (crosses)
Minor pairs combine two major currencies without the US dollar. Examples include EUR/GBP, EUR/JPY and GBP/JPY. They are still liquid, although spreads are usually a little wider than on the majors. Moreover, crosses can move sharply when both economies are in the news at the same time.
Exotic pairs
Exotic pairs combine a major currency with the currency of a smaller or emerging economy. USD/ZAR (South African rand), USD/NGN (Nigerian naira) and USD/KES (Kenyan shilling) are examples many of our readers know well. Exotics can move strongly, but they also carry wider spreads, higher overnight costs, and sometimes thin liquidity. As a result, many traders keep their position sizes smaller on exotics.
What Else Is Traded at Forex Brokers
Most retail forex brokers now offer far more than currency pairs. These extra instruments are usually contracts for difference (CFDs), which track the price of an asset without you owning it.
- Metals: gold (XAU/USD) and silver (XAG/USD) trade much like currency pairs. Our guide to charting XAUUSD on TradingView covers gold in more detail.
- Stock indices: CFDs on indices such as the US 30, the S&P 500 and the Nasdaq index.
- Energies: crude oil and natural gas.
- Cryptocurrencies: some brokers list Bitcoin and other coins against the dollar.
- Synthetic indices: certain brokers offer simulated markets that run around the clock. See our guide to Deriv synthetic indices to learn how they differ from real markets.
Each of these behaves differently. For instance, gold reacts strongly to interest rate expectations, while indices follow company earnings and wider risk sentiment. Therefore, check the contract size, trading hours and costs before trading any instrument that is new to you.
How Currencies Get Traded in Forex: An Example
Suppose you think the British economy looks strong and the pound may rise against the dollar. In that case, you would buy GBP/USD. If the pound strengthens, you can sell the pair back at a higher price and keep the difference. If it weakens, you lose. The figures depend entirely on your position size and how far price moves.
Profit is never a certain outcome. A hasty decision can turn into a loss, and traders who cannot accept losing trades often quit early. A clear plan helps, including a stop-loss on every position and a fixed risk per trade. Our guide to forex risk management explains the main rules.
Choosing What to Trade
Now that you know what is traded in forex, the next question is what you should trade. For most beginners, one or two major pairs are enough. They are cheaper to trade, analysts cover them widely, and they are generally steadier than exotics. Later, you can add a cross or gold once you understand how each one moves.
Technical tools work the same way across these instruments. A reversal candle such as the hanging man candlestick reads the same on EUR/USD as on gold. For pair-specific ideas, see these EUR/USD trading strategies. Some traders also use an automated system such as VantageX EA, which can trade selected pairs and indices according to fixed rules.
Risk note: Trading forex and synthetic indices involves substantial risk of loss. Results vary between accounts and market conditions. Past performance does not guarantee future results. Only trade with capital you can afford to lose.