Minor

In forex trading, the term “minor” refers to currency pairs that do not include the US dollar (USD) as one of the currencies. These currency pairs involve two major currencies other than the USD. For example, EUR/GBP, EUR/JPY, and GBP/JPY are considered minor currency pairs.

Minor currency pairs are also known as cross currency pairs or crosses. They represent the exchange rate between two major currencies and are traded without involving the USD. These pairs are typically denoted by three-letter currency codes, such as EUR (Euro), GBP (British Pound), JPY (Japanese Yen), AUD (Australian Dollar), and CAD (Canadian Dollar).

Trading minor currency pairs can offer opportunities for diversification and trading strategies that focus on specific economies or regions. They allow traders to speculate on the relative strength or weakness of one currency against another without the influence of the USD.

Minor currency pairs tend to have lower liquidity and trading volume compared to major currency pairs. As a result, they may have wider bid-ask spreads, meaning there is a greater difference between the buying and selling prices. This can make it more challenging to enter and exit trades at desired prices, and it may also increase transaction costs.

Since minor currency pairs involve currencies from different economies, they can be influenced by various economic indicators, political events, and market sentiment specific to those countries. Traders who choose to trade minor pairs should closely monitor economic news, central bank announcements, and any other factors that may affect the currencies involved.

It’s important to note that while minor currency pairs can offer potential trading opportunities, they also carry higher risk due to their lower liquidity and potentially higher volatility. Traders should have a good understanding of the factors impacting the currencies in the pair and employ proper risk management strategies when trading minors.

In summary, minor currency pairs in forex trading are currency pairs that do not include the US dollar. They involve two major currencies and are traded without the influence of the USD. Trading minor pairs can provide diversification opportunities, but they also come with higher risk due to lower liquidity and potentially wider spreads. Traders should stay informed about economic developments and employ risk management techniques when trading minor currency pairs.