An Overview on Currency Pairs in Trading

forex currency exchange
If you have decided to start trading, then you must deal with currencies and for this, you must have great knowledge about currencies. 

Currency Exchange is to buy a currency at a low rate and sell it at a high rate. Forex currency exchange rates tend to constantly rise and fall against each other due to numerous factors, such as world economics, government policies, international trade, and political factors.

Now, let's talk about the currencies pair. A currency pair is the quotation of two different currencies in which the first currency ( known as the base currency), is quoted against the other i.e. second currency ( known as the quote currency). 

In this article, we'll talk about major currencies pair traded in the Forex Market, types of currency pairs and more. Let's begin!

There are three types of currency pairs: major, minor and exotic currency pairs. 

Major Currency Pairs:

The currencies that trade the most volume against the U.S. dollar are referred to as the major currencies. 

Major Currencies Pair:

  • Euro/U.S. Dollar: EUR/USD 
  • U.S. Dollar/Japanese Yen: USD/JPY    
  • Great British Pound/U.S. Dollar: GBP/USD 
  • U.S. Dollar/Canadian Dollar: USD/CAD    
  • U.S. Dollar/Swiss Franc: USD/CHF 
  • New Zealand Dollar/U.S. Dollar: NZD/USD    
  • Australian Dollar/U.S. Dollar: AUD/USD 

Minor Currency Pairs:


The currency pairs that don’t include the US dollar are known as Minor Currency Pairs or Cross Currency Pairs. 

Some examples of crosses include the 

  • EUR/GBP: Euro/British pound
  • GBP/JPY: British pound/Japanese yen
  • GBP/CAD — British pound/Canadian dollar

The most widely traded minor pairs consist of the euro, yen or British pound.

Exotic Currency Pairs:


An exotic currency pair includes a major currency and the currency of a developing economy i.e. Brazil or South Africa. Since the spreads can be higher that why you won't find exotic pairs as often to trade. 

Exotic currency pairs include:

  • EUR/TRY: Euro/Turkish lira
  • USD/HKD: US dollar/Hong Kong dollar
  • JPY/NOK: Japanese yen/Norwegian krone


Which pairs should I trade?


Currency Pairs
With so many options available, you must be thinking - which currencies should I trade? If you’re beginners, it’s better to use major and minor pairs because you’ll get lower spreads in these currency pairs. Exotic pairs are more difficult to work with because you’ll find higher spreads.

To learn more about currency pairs, you can join 

trading courses for beginners or can watch forex
trading training videos. These will help you to succeed in trading. 

Comments

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