Majors, minors and exotics
Lesson 6 · about 8 min
Brokers list dozens of pairs. A beginner needs to know which handful are worth trading, and why the rest are more expensive than they look.
The majors
The majors are the seven pairs that combine the US dollar with another heavily traded currency:
| Pair | Nickname | Share of global turnover (approx.) | Typical retail spread |
|---|---|---|---|
| EUR/USD | Fiber | 23% | 0.1 to 1.0 pip |
| USD/JPY | Gopher | 14% | 0.2 to 1.2 pips |
| GBP/USD | Cable | 10% | 0.4 to 1.5 pips |
| AUD/USD | Aussie | 6% | 0.4 to 1.5 pips |
| USD/CAD | Loonie | 5% | 0.5 to 2 pips |
| USD/CHF | Swissie | 4% | 0.5 to 2 pips |
| NZD/USD | Kiwi | 2% | 0.8 to 2.5 pips |
Shares are from the BIS triennial survey and shift over time; spreads depend on broker and session. The point of the table is the ordering, not the decimals. EUR/USD alone is roughly a quarter of all FX turnover, which is why its spread is the tightest anywhere.
Majors have the deepest liquidity, the tightest spreads, the most news coverage and the most predictable behaviour around scheduled events. They are where beginners should start and, for most retail traders, where they should stay.
The minors (crosses)
Minors are pairs between major currencies that do not include the dollar: EUR/GBP, EUR/JPY, GBP/JPY, EUR/CHF, AUD/JPY, EUR/AUD, GBP/CAD and so on.
They are liquid, but less so than the majors, and their spreads are wider because the broker's LPs are effectively pricing two dollar legs. A few things to know:
- Yen crosses (GBP/JPY, EUR/JPY, AUD/JPY) move a lot. GBP/JPY can cover 150 pips in a day when GBP/USD covers 90. Big ranges look attractive; they also mean bigger stops and faster losses.
- EUR/GBP and EUR/CHF move little. They are useful for traders who want low volatility, and dull for everyone else.
- Crosses respond to two sets of news. GBP/JPY reacts to UK data, Japanese data, and global risk sentiment. That is more to keep track of.
Exotics
Exotics pair a major currency with an emerging-market or small-economy currency: USD/TRY (Turkish lira), USD/ZAR (South African rand), USD/MXN (Mexican peso), USD/SEK, USD/NOK, USD/PLN, USD/HUF, USD/SGD, USD/HKD, USD/THB and many more.
They are expensive in every dimension:
| Characteristic | Majors | Exotics |
|---|---|---|
| Spread | Under 1 pip | 10 to 100+ pips |
| Swap (overnight) | Small | Often large, and heavily one-sided |
| Gaps | Rare, small | Common, large |
| Liquidity in Asia | Adequate | Frequently very thin |
| Political risk | Low | Capital controls, sudden devaluations |
A 40-pip spread on USD/ZAR means the trade starts 40 pips underwater; on a major you could be 40 pips in profit for the same cost. The high interest rates in some exotic currencies also produce large swaps that quietly make holding a short position very expensive (Module 4).
Exotics are not "advanced majors." They are a different job with different risks. Leave them until you have a track record on majors and a specific reason to look.
Key idea: Cost scales with obscurity. Majors are cheap because everyone trades them; exotics are expensive because few do. As a beginner, trade where the cost is lowest and the behaviour is best documented.
Currency nicknames and the dollar index
Traders talk about currencies as much as pairs: "the euro is bid," "cable is heavy," "the yen is being sold." Learn to translate:
- "The dollar is strong today" means EUR/USD, GBP/USD, AUD/USD, NZD/USD down; USD/JPY, USD/CHF, USD/CAD up.
- "Risk-off" often means JPY and CHF strong, AUD and NZD weak (Module 5).
- The dollar index (DXY) is a weighted basket of the dollar against six currencies (EUR 57.6%, JPY 13.6%, GBP 11.9%, CAD 9.1%, SEK 4.2%, CHF 3.6%). It is more than half euro, so it mostly tells you what EUR/USD is doing, inverted.
Which pairs a beginner should watch
Pick from EUR/USD, GBP/USD, USD/JPY and one of AUD/USD or USD/CAD. Three is plenty (Module 6 explains why). Ignore everything with a spread over three pips until you can explain, from your own trade log, why you need it.
Try it: Pull up the live spread table on your broker's platform during the London session and again during the Sydney session. Note EUR/USD, GBP/JPY and USD/ZAR at both times. Write down the ratio between the widest and tightest. That ratio is roughly how many extra winning pips the exotic needs to produce before it breaks even.
Recap
- The seven majors pair the dollar with EUR, JPY, GBP, AUD, CAD, CHF and NZD and carry the tightest spreads.
- Minors (crosses) exclude the dollar, cost more, and yen crosses in particular move fast.
- Exotics have wide spreads, large swaps, frequent gaps and political risk; they are not for beginners.
- Currency-level talk ("dollar strong", "risk-off") translates into pair moves in opposite directions depending on where USD sits in the pair.
- Start with two or three majors; add a pair only when your log gives you a reason.
See it drawn
Original diagrams for the ideas on this page. Illustrative, not real market data.