Back To Top
Forex pairs are combinations of two different currencies that are traded in the foreign exchange (forex) market. Each pair consists of a base currency and a quote currency. In this guide, we will cover how currency pairs work, the types of currency pairs, and how to read forex pairs with examples.
Quick Insights
Currency pairs represent the value of one currency against another and are traded in the forex market.
There are three main types of currency pairs major, minor, and exotic pairs.
To trade, you need to know the bid (sell) and ask (buy) prices for the pair you want.
The foreign exchange market (forex) is a huge global market with $6.6 trillion traded daily. There are around 170 currencies globally, leading to over 28,000 possible pairs, but only a few major ones dominate trading.
What is forex pairs? In forex trading, a currency pair represents the value of one currency against another Each currency pair is made up of a base currency and a quote currency. The base currency is the currency you’re buying (left side of the pair), and the quote currency is the currency you’re using to buy the base currency (right side).
Long position: If you think the euro will get stronger compared to the dollar, you buy euros and sell dollars. You profit if the euro's value goes up. Here, we revealed the top 5 best trading strategies for consistent profits.
Trading currency pairs in forex trading are categorized into three main types: major, minor, and exotic pairs. Here are they:
Major currency pairs always include the US dollar (USD) and one of the other major currencies, like the Euro (EUR) or the British Pound (GBP).
These pairs are heavily traded and come from stable economies, making them less volatile. They have a low bid-ask spread, meaning the difference between buying and selling prices is small.
The most traded major pairs are:
Minor currency pairs do not include the US dollar. They consist of other major currencies paired with each other or with smaller currencies. These pairs are well-known but have lower trading volumes compared to major pairs. Examples include:
Exotic currency pairs involve one major currency and one currency from an emerging market. These pairs are less liquid, meaning they have larger bid-ask spreads and can be more volatile due to political and economic instability. Examples of exotic pairs include:
In forex trading, currency pairs show how much of one currency you need to buy another currency.
Currency pairs are how currencies are quoted and traded in the forex market. Each pair involves two currencies: the base currency and the quote currency.
Example: USD/CAD = 1.3
Here are simple steps to buy currency pairs:
| Recommended Reading: 10 Key Benefits of Trading Forex
Forex pairs involve trading one currency against another in the global forex market. They come in three types: major pairs (like EUR/USD), minor pairs (like GBP/JPY), and exotic pairs (like USD/TRY).
To trade, you need to understand the bid and ask prices, and how to read currency pairs, with the base currency listed first and the quote currency second. Traders aim to profit from fluctuations in exchange rates by taking long or short positions. Learning to read and trade these pairs is essential for success in the forex market.
Pro Tip
This article covered forex pairs from how they work to how to read. If you are someone looking to improvise your trading achievements, then must try visting our trusted Forex brokers! Stay abreast of stocks, CFDs, banking, trading, investment, and cryptocurrencies. Find reliable broker reviews to make smart trading decisions.
Discover the world of forex trading with our comprehensive guide. Learn essential...
Read MoreFounded in 2005, FP Markets is a leading online broker renowned for...
Read MoreEthereum is a decentralized blockchain platform that enables smart contracts, enabling secure,...
Read MoreInvesting in cryptocurrency involves selecting the right cryptocurrency and securely storing your...
Read MoreTraders look for the currency pair price movements, their patterns, and their...
Read MoreAre you seeking for safe investment with predictable returns? Our 2024 guide...
Read MoreUnsure about choosing the best trading strategies for beginners in 2024? This...
Read MoreForex pairs are combinations of two different currencies that are traded in...
Read MoreForeign Exchange – Forex market is the world’s largest financial market in...
Read More