What’s in a pair? – easy-forex – Education – VOD

by Joe Oliver, Forex Trading-Pips

Now that you know the basics of what forex is let’s look at the different components of trading in a little more detail.

www.easy-forex.com, explain the first thing that you need to understand when looking at a currency pair: 

trade naked easy forexWhen you look at a currency table or are deciding to trade a pair you will see the symbols of the currencies available to trade. For example, if you are going to trade the euro versus the US dollar you will see the currency pair symbols EUR/USD.
The first currency mentioned, which in this case is the EUR, is called the “base” currency and the second currency, which in this case is the USD, is called the “counter” currency. 
The most commonly traded pairs are called the majors and these include: EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, and the USD/CAD. You will note that the USD is always one of the currencies in a major pair. The majors make up approximately 85% of the forex market and, as a result, have high liquidity, which means they have high trading volumes and volatility which creates multiple trading opportunities. 
In addition to the majors you also have the option to trade cross currency pairs. Crosses do not contain the USD as a currency but contain other major currencies. An example of this is the EUR/CHF (euro swissey). 
Finally we have the exotics — these are pairs that have one major currency and another that is from an emerging market such as the Singapore dollar or South African rand. Note that because exotics are less frequently traded they are less volatile and therefore the spread or difference between the base and quote currency tends to be wider. 
When you start trading you will start to come to know these pairs by their nicknames. The GBP/USD is commonly referred to as the cable, the AUD/USD is called the aussie and the NZD/USD the kiwi to name a few.
Now that you understand what a pair is you will want to view our next video on “What is a pip?” as well as check out the rest of our Learn education videos, the easy-forex eBook and maybe attend one of our upcoming webinars!

 

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For more info visit www.easy-forex.com today! 

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