Major vs. Exotic Forex Pairs: Trader Preferences

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TU Research examines why retail Forex traders choose major, minor, or exotic currency pairs and whether those preferences reflect differences in liquidity, trading costs, and risk. The research scenario indicates that 61% primarily trade major currency pairs, while 12% prefer exotic pairs. Low spreads are the leading factor in pair selection for 34% of traders, but only 38% correctly identify the full cost implications of trading less liquid currencies. Although 29% believe exotic pairs offer greater profit potential, only 14% report that these pairs have produced their best trading results. The findings suggest that major pairs remain the preferred choice, while expectations of higher returns may encourage some traders to accept risks they do not fully understand.

Currency-pair selection plays a central role in Forex trading. Major pairs such as EUR/USD and USD/JPY offer high liquidity and competitive spreads, while exotic pairs may attract traders seeking greater volatility and different market opportunities.

According to the Bank for International Settlements (BIS), daily Forex turnover reached $9.6 trillion in April 2025, with the US dollar involved in 89.2% of transactions. Despite the dominance of major currencies, trading activity in emerging-market currencies continues to expand.

This TU Research study examines whether retail traders prioritize liquidity and lower trading costs or pursue the perceived profit potential of exotic pairs, and how these preferences relate to trading performance.

The research aims to answer key questions:

Do traders prefer major, minor, or exotic pairs?
Which Forex pairs are most popular?
What drives currency-pair selection?
Do traders understand exotic-pair trading costs?
Are exotic pairs considered more profitable?
What discourages traders from trading exotic pairs?
Which pairs deliver the best trading results?
Would traders pay more for higher volatility?

Findings

The research framework identifies several important patterns:

Major currency pairs dominate retail preferences. Some 61% primarily trade major pairs, compared with 27% who prefer minor pairs and 12% who favor exotic pairs.
EUR/USD remains the leading individual choice. It is the most frequently selected primary trading pair at 29%, followed by GBP/USD at 17% and USD/JPY at 15%.
Trading costs influence currency-pair selection. Low spreads are the leading consideration for 34% of respondents, ahead of volatility at 22% and familiarity at 17%.
Knowledge of exotic-pair costs is limited. Only 38% correctly recognize that wider spreads, slippage, and changing liquidity conditions can increase effective trading costs.
Exotic pairs attract traders seeking higher returns. Some 29% believe exotic pairs offer greater profit potential, although 36% consider their profitability too dependent on market conditions to generalize.
Liquidity concerns discourage exotic-pair trading. Wider spreads and execution costs are the main obstacle for 31% of traders, followed by unpredictable volatility at 24%.
Reported performance favors major pairs. Some 49% identify major pairs as the category producing their best trading results, while 14% select exotic pairs.
Higher volatility does not justify unlimited costs. Only 21% would accept substantially wider spreads for access to larger potential price movements, while 47% would prefer lower-cost alternatives.

Risk warning: Forex trading carries high risks, with potential losses including your entire deposit. Market fluctuations, economic instability, and geopolitical factors impact outcomes. Studies show that 70-80% of traders lose money. Consult a financial advisor before trading.

Institutional validation

Institutional research shows that major currencies dominate global Forex trading, while emerging-market currencies are gaining market share. Differences in liquidity, trading costs, and volatility help explain why traders may prefer certain currency pairs.

The Bank for International Settlements (BIS) reported in its Triennial Central Bank Survey: OTC Foreign Exchange Turnover in April 2025 that daily FX turnover reached $9.6 trillion, up 28% from 2022. The US dollar accounted for 89.2% of transactions, while EUR/USD and USD/JPY represented 21.2% and 14.3% of global turnover, respectively.

The same BIS survey documented growing activity in emerging-market currencies. USD/CNY's share increased from 6.6% in 2022 to 8.1% in 2025, demonstrating that some less traditional currency pairs attract substantial institutional trading volumes.

The European Securities and Markets Authority (ESMA) established different retail CFD leverage limits in its Product Intervention Measures for CFDs and Binary Options: 1:30 for major currency pairs and 1:20 for non-major pairs. These restrictions reflect differences in market risk and volatility.

In Foreign Exchange Liquidity in the Americas, the BIS examined how market depth, spreads, and liquidity conditions influence currency trading. Its analysis highlights why less liquid pairs may involve higher transaction costs and greater execution risks, particularly during market stress.

More recent BIS research, Shifting Currents in FX and Interest Rate Derivatives, examined how institutional hedging and changing market conditions shape global FX activity. However, institutional turnover does not necessarily reflect retail trader preferences.

The central question is whether retail Forex traders prioritize the liquidity and lower costs of major pairs or pursue the perceived profit opportunities of exotic currencies despite their additional risks.

Theoretical research

Currency-pair preferences can be understood through the relationship between liquidity, transaction costs, volatility, and expected returns. Traders may prefer highly liquid currency pairs because competitive spreads and more consistent execution conditions reduce the cost of entering and exiting positions. However, less liquid pairs may attract traders who expect larger price movements or seek exposure to different economic conditions.

A central concept is the liquidity premium. When a currency pair has limited market depth, traders may face wider bid-ask spreads or greater slippage, particularly during periods of uncertainty. These costs can reduce profitability even when the trader correctly anticipates the direction of the exchange rate.

Consider two hypothetical Forex trades with identical position sizes and expected price movements. If the major pair has a two-pip effective trading cost and the exotic pair has a 15-pip cost, the exotic trade must overcome an additional 13 pips before producing the same net result. This illustrates why greater volatility does not automatically translate into greater profitability.

The relationship between risk and expected returns is also relevant. Exotic currency pairs may experience substantial movements following monetary policy decisions, changes in capital flows, or political developments. Yet greater volatility increases both potential gains and potential losses, while trading costs and liquidity constraints can make unfavorable outcomes more difficult to manage.

Behavioral finance offers another explanation for currency-pair selection. In Prospect Theory: An Analysis of Decision under Risk, Daniel Kahneman and Amos Tversky demonstrated that individuals evaluate potential gains and losses relative to reference points and may respond differently to risk depending on how outcomes are presented. Applied to Forex trading, expectations of unusually large price movements may attract attention even when the probability and cost of achieving profitable outcomes are uncertain.

This creates a tension between familiarity and opportunity seeking. Major pairs may appeal to traders who prioritize transparent pricing, accessible market information, and relatively low transaction costs. Exotic pairs may attract those seeking different market behavior or larger potential movements, although these characteristics do not establish a systematic profitability advantage.

Survey data

To examine retail Forex trading preferences, the research framework covers currency-pair selection, trading costs, perceived profitability, risk awareness, and reported trading performance. The questionnaire distinguishes between the currency pairs traders prefer and those that have produced their best results.

Methodology

The study is designed around a structured online questionnaire using the CAWI methodology.

Sample composition: 1,520 retail Forex traders.
Coverage: North America, Europe, Asia, Latin America, Africa and the Middle East.
Age: 18–60 years old.
Participation criteria: Individuals who have traded Forex within the previous 12 months.
Research scope: Preferences for major, minor, and exotic currency pairs, trading costs, liquidity, volatility, perceived profitability, and trading performance.
Classification: Major pairs include EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD, AUD/USD, and NZD/USD. Minor pairs are crosses between major currencies that exclude USD. Exotic pairs include currencies from emerging or smaller markets, such as USD/MXN, USD/ZAR, and USD/TRY.
Response format: Single-choice questions unless otherwise indicated.

Research team

The study was conducted by our experts:

Anastasiia Chabaniuk (Author, TU research) – research design and interpretation.
Chinmay Soni (Fact-checker) – data validation and statistical verification.
Ciaran Ryan (Editor-in-Chief) – editorial and methodological supervision.
TU research team (Andrey Mastykin, Oleg Tkachenko) – data collection and analysis.

Do traders prefer major, minor, or exotic currency pairs?

The first question examines which category of currency pairs respondents trade most frequently. Participants were asked to select the category representing the largest share of their Forex trading activity.

Primary category of currency pairs traded:

Major currency pairs – 61%;
Minor currency pairs – 27%;
Exotic currency pairs – 12%.

Insight: Major pairs account for 61% of preferences, substantially exceeding the combined share of minor and exotic pairs. This pattern is consistent with the concentration of activity in major currencies documented by the BIS, although the two measures cover different populations. The 12% preference for exotic pairs nevertheless indicates that a meaningful minority of retail traders actively seeks exposure beyond established currency markets.

Which currency pairs are most popular among retail traders?

Respondents were asked to identify the single currency pair they trade most frequently. The question examines whether retail preferences follow the global concentration of activity in major dollar pairs.

Most frequently traded currency pair
Currency pair	Share
EUR/USD	29%
GBP/USD	17%
USD/JPY	15%
AUD/USD	9%
USD/CAD	7%
USD/CHF	6%
EUR/GBP	6%
USD/MXN	4%
USD/ZAR	3%
Other currency pairs	4%

Insight: EUR/USD is the leading individual choice at 29%, followed by GBP/USD and USD/JPY. Together, these three pairs account for 61% of primary selections, indicating a strong concentration of retail activity in familiar currencies. The ranking broadly resembles institutional turnover patterns, although retail preferences place GBP/USD ahead of USD/JPY in this scenario. The difference between the 83% selecting an individual major pair and the 61% primarily trading major pairs reflects the distinction between a trader's most frequently traded individual instrument and their overall activity across currency-pair categories.

What matters most when choosing a Forex currency pair?

Respondents were asked to select the single most important factor influencing their currency-pair selection. The options distinguish transaction costs from volatility, familiarity, and expected trading opportunities.

Primary factor influencing currency-pair selection:

Low trading costs – 34%;
Volatility and profit opportunities – 22%;
Currency familiarity – 17%;
Liquidity and execution – 12%;
Economic news and analysis – 8%;
Interest-rate differences – 4%;
Other / unsure – 3%.

Insight: Low trading costs are the leading individual factor at 34%, suggesting that price efficiency plays a significant role in retail currency selection. Volatility ranks second at 22%, indicating that traders also value the potential for meaningful price movements. The findings suggest that pair selection involves a trade-off between execution efficiency and perceived trading opportunity rather than a preference for volatility alone.

Do Forex traders understand the costs of exotic currency pairs?

Respondents were presented with a hypothetical comparison between a liquid major pair and a less liquid exotic pair. They were asked which statement best describes how transaction costs may differ between the two instruments.

Understanding of exotic-pair trading costs
Response	Share
Exotic pairs may have wider spreads, greater slippage, and variable liquidity	38%
Trading costs are generally the same across all Forex pairs	19%
Exotic pairs are cheaper because they attract fewer traders	14%
Wider spreads matter only when positions are held overnight	16%
Not sure	13%

Insight: Only 38% identify the answer that recognizes the combined impact of spreads, slippage, and liquidity. The remaining 62% either select an incomplete or incorrect explanation or express uncertainty. This knowledge gap is important because effective trading costs can materially influence profitability, particularly when positions are opened and closed frequently.

Do traders believe exotic pairs offer greater profit potential?

Respondents were asked whether trading exotic currency pairs generally offers better opportunities for profit than trading major pairs. The question measures perceived profitability rather than actual returns.

Perceived profit potential of exotic pairs:

Exotic pairs offer higher profit potential – 29%;
Depends on strategy/market conditions – 36%;
Major pairs offer better opportunities – 21%;
No significant difference – 8%;
Not sure – 6%.

Insight: Nearly three in ten traders associate exotic pairs with greater profit potential, reflecting the appeal of larger price movements. However, the largest group, at 36%, recognizes that profitability depends on trading strategy and market conditions. This distinction matters because volatility alone does not establish an advantage after accounting for trading costs and the probability of losses.

What prevents traders from trading exotic currency pairs?

Respondents were asked to identify the main reason they avoid or limit trading in exotic pairs. The question examines whether transaction costs, volatility, or access to information presents the greatest barrier.

Understanding of exotic-pair trading costs
Barrier	Share
Wider spreads and higher execution costs	31%
Unpredictable volatility	24%
Limited knowledge of the currencies	17%
Lower liquidity and slippage risk	13%
Limited broker availability or trading conditions	8%
No interest in exotic pairs	5%
Other / unsure	2%

Insight: Wider spreads and execution costs are the leading barrier at 31%, while unpredictable volatility accounts for another 24%. Together, these responses indicate that the financial and operational characteristics of exotic pairs discourage many traders from using them. Limited familiarity also matters, suggesting that currency-specific knowledge can influence preferences independently of expected returns.

Which currency pairs have produced the best trading results?

Respondents were asked which category of currency pairs had generated their best overall trading results during the previous 12 months. The question relies on respondents' own assessments and does not independently verify account-level profitability.

Best-performing currency-pair categories:

Major currency pairs – 49%;
Minor currency pairs – 20%;
Exotic currency pairs – 14%;
Similar results across categories – 9%;
Unable to determine / insufficient records – 8%.

Insight: Major pairs are the most frequently selected category for best reported trading results at 49%, compared with 14% for exotic pairs. However, these figures do not establish that major pairs are inherently more profitable, since traders have different levels of experience and exposure to each category. The results instead suggest that the instruments traders use most frequently are also those most commonly associated with their strongest perceived outcomes.

Would traders accept higher costs for greater volatility?

Finally, respondents were presented with a hypothetical choice between a major currency pair offering relatively low spreads and an exotic pair with substantially wider spreads but potentially larger price movements. They were asked which option they would prefer under otherwise comparable trading conditions.

Preference when higher volatility involves higher trading costs
Response	Share
Prefer the lower-cost major pair	47%
Choose the higher-volatility exotic pair	21%
Trade both depending on market conditions	19%
Avoid trading under these conditions	8%
Not sure	5%

Insight: Nearly half of respondents prefer the lower-cost major pair, while 21% would accept higher trading costs to access potentially larger price movements. Another 19% would adjust their choice according to market conditions, indicating that preferences are not always fixed. Overall, the distribution suggests that higher volatility attracts a minority of traders but does not outweigh transaction-cost considerations for most respondents.

Download the full PDF version of the TU research to access additional analysis, detailed survey data, and extended findings from our analytical team. The report includes complete methodology, charts, and behavioral insights referenced throughout the study.

Download PDF version

Practical implications for Forex traders

The choice between major and exotic currency pairs should reflect a trader's strategy, risk tolerance, and understanding of execution costs. Higher volatility may create trading opportunities, but it also increases uncertainty and does not guarantee better returns.

Evaluate total trading costs. Compare spreads, commissions, swaps, and potential slippage rather than relying on advertised minimum spreads.
Match currency pairs to trading strategies. Short-term strategies may be particularly sensitive to spreads and execution quality, while longer-term positions can be affected by financing costs and macroeconomic developments.
Understand liquidity conditions. Currency-pair liquidity can vary by trading session, economic announcement, and market environment. A pair that trades efficiently during normal conditions may become more expensive during periods of stress.
Avoid treating volatility as a measure of profitability. Larger price movements increase the range of possible outcomes but do not improve a strategy's expected return automatically.
Consider currency-specific risks. Emerging-market currencies can respond sharply to monetary policy, capital flows, political developments, and changes in global risk sentiment.
Use appropriate position sizing. Traders should account for volatility, stop-loss execution uncertainty, and leverage when determining exposure.
Review historical performance by pair. Maintaining separate records for major, minor, and exotic pairs can help identify whether a strategy performs consistently across different market conditions.
Check broker trading conditions. Available instruments, margin requirements, execution policies, and overnight financing charges can differ substantially across brokers.

Since the research scenario indicates that 34% of traders prioritize low spreads and 31% identify higher execution costs as the main barrier to trading exotic pairs, broker pricing and execution conditions are particularly relevant. The following comparison can help traders evaluate Forex brokers based on their trading costs and available instruments.

Best Forex brokers
	Plus500	OANDA	Trading.com USA	FOREX.com	IG Markets	Interactive Brokers
Demo
Tradable assets	2,800	129	69	5,500	20,000	30,000
Currency pairs	60	68	69	80	80	100
Min. deposit, $	100		50	100	1
Standard EUR/USD spread	0.7	0.3	1.1	1.0	0.9	0.5
Standard GBP/USD spread	0.8	0.3		1.2	1.1	1.0
TU overall score	7.68	7.22	5.98	7.1	7.03	7
Open an account	Go to broker 81% of retail CFD accounts lose money.	Go to broker Your capital is at risk.	Go to broker Your capital is at risk.	Study review	Study review	Study review

Data sources and methodology

Bank for International Settlements (2025). Triennial Central Bank Survey: OTC Foreign Exchange Turnover in April 2025.
Bank for International Settlements (2025). OTC Foreign Exchange Turnover in April 2025 – Commentary.
Bank for International Settlements (2025). Global FX Trading Hits $9.6 Trillion per Day in April 2025.
Bank for International Settlements (2025). Shifting Currents in FX and Interest Rate Derivatives: Highlights from the 2025 Triennial Survey.
Bank for International Settlements (2016). Foreign Exchange Liquidity in the Americas.
European Securities and Markets Authority (2018). Product Intervention Measures in Relation to CFDs and Binary Options Offered to Retail Investors.
Bank of Finland (2025). BIS Survey of Foreign Exchange and OTC Derivatives Markets 2025.
Kahneman, D., and Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263–291.
Bank for International Settlements (2025). Triennial Central Bank Survey: Detailed Currency-Pair Turnover Tables.
Bank for International Settlements (2025). Global FX Market Developments and Hedging Activity.
Traders Union. What Are Currency Pairs & How To Trade Them.
Traders Union. 28 Most Liquid and Widely-Traded Currency Pairs on Forex.
Traders Union. The Most Traded Currencies And Currency Pairs.
IdSurvey. CAWI Methodology.

Previous volumes in this series

Conclusion

The strong preference of retail traders for major Forex pairs reflects a clear prioritization of liquidity and lower trading costs over the potential volatility and profit opportunities found in exotic pairs. Despite 29 percent believing exotic pairs could yield higher returns, only 14 percent report their best results from these riskier instruments, underscoring the reality that higher volatility does not guarantee better performance. Major pairs like EUR/USD remain dominant choices because their tighter spreads and consistent execution help protect profitability, whereas exotic pairs' wider spreads and unpredictable volatility discourage most traders. Ultimately, the data highlight that understanding and managing total trading costs is essential for long-term success in Forex trading.

FAQs

How do liquidity conditions differ between major and exotic Forex pairs?

Major Forex pairs are characterized by higher liquidity, resulting in tighter spreads and more reliable execution, especially during normal market conditions. In contrast, exotic pairs typically have lower liquidity, leading to wider spreads, increased slippage, and greater variability in trading costs, which become more pronounced during periods of market stress.

What risks are associated with trading exotic currency pairs compared to major pairs?

Exotic currency pairs involve risks such as wider spreads, higher execution costs, and unpredictable volatility. These factors can increase both transaction expenses and potential price swings, making it harder to manage unfavorable outcomes, especially for traders who are less familiar with the market dynamics of these currencies.

In what ways can trading strategy influence the choice between major and exotic Forex pairs?

Short-term trading strategies are particularly sensitive to spreads and execution quality, making major pairs more suitable due to their lower costs and stable liquidity. Long-term or opportunity-seeking strategies might target exotic pairs to benefit from larger price movements, but must account for increased transaction costs and potential exposure to macroeconomic or political shifts.

Why does higher volatility not always lead to increased profitability when trading exotic pairs?

While exotic pairs may offer larger price movements, higher volatility also amplifies both potential gains and losses. However, increased trading costs—such as wider spreads and slippage—can offset or outweigh the benefits of volatility, meaning that greater price swings do not guarantee improved returns for traders.

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Team that worked on the article

Anastasiia has 17 years of experience in finance and content marketing. She believes that the support of information and expert opinion is very important for the success of investors and new traders.

Learn about our editorial policies

Ciaran Ryan is a veteran financial journalist based in South Africa, where he covers cryptocurrency, mining, stock markets, and governance for Moneyweb. He also hosts the weekly Moneyweb Crypto Podcast.

Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data.

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