Currency Pairs

The price quote relevant to two different currencies when currency exchange is occurred is called the currency pair.

The value of one major currency against another foreign currency in the exchange market is called the currency pair.

When we trade the Forex, the base or first noted currency will be bought and the second one or quote currency will be sold.

The most liquid or the main currency pair in the Forex market is EUR/USD and the next main currency pair in the world is USD/JPY

Currency Types 

There are two currency types: they are major and minor currencies


In addition to the above currencies, others are fall into minor currencies and the major currencies are more important in the Forex trading.

Keep remember, the major currency which is used intensively in Forex market is USD

All the currencies are denoted by the ISO currency code (three alphabetic letters)

This is called a currency pair and this means EUR is divided by USD. The value of Euro compare to the Dollar.

Example: EUR/USD = 1.241. You need 1.241 dollar to purchase one dollar.

There are some currency pairs identified in the market. We can identify three currency pairs in the exchange market. Those are,

Majors
Crosses
Exotics

 

Major Currency Pairs

The most liquid currencies can be identified as major pairs. The currency pair indicates how much of one currency can be bought by another currency. For example, EUR/USD = 1.1 is one of the major currency pairs and it would tell you that by expending one EUR, you can buy 1.1 USD. The USD represents in every major currency pairs. These pairs are accounts for a higher trading volume and turn over in the Forex market. The major pairs can be mentioned as follows;

Cross Currency Pairs

The second pair is cross currency pair in which USD is not included. The cross currency pairs are represented as follows;

Exotic Currency Pairs

The third pair the exotic pair. This currency pair is not that liquid as the other two. The information and market analysis might be not enough for this pair. These can be identified as thinly traded pairs. Therefore it is somewhat risky of trading with this pair. Some examples for exotic pair are mentioned below;

USD/ZAR
USD/MXN
USD/THB
USD/INR
USD/TRY

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