Currency Pairs



Most new traders always ask questions about currency pairs, in order to have a better understanding of currency pairs and how they are traded in the Forex market, let’s break down some of the important aspects in trading currency pairs.

Currency is  the universally accepted form of money, such as coins and paper notes used in exchange for other goods.

Typically, each country has its own currency. With the exception of the euro, which is being used by several European nations as their official currency.

Traders often deal with currency on the FX market, which is acknowledged as one of the most massively traded markets in the world.

 

So What Is Currency Pair?

A currency pair is a quotation of the corresponding value of a currency in comparison to another currency in forex trading.

The first currency in a currency pair the base currency, while the second currency which is used as the reference is called the quote currency.

With the currency pair, traders will be able to know how much of the quote currency is required to buy one unit of the base currency.

 

How to trade Currency Pairs?

Forex trading is done by purchasing one currency and selling another simultaneously, however, the currency pair can be considered as a single instrument which can be traded in the market.

Many first time traders would ask about the process of trading currency pairs. When buying a currency pair, the trader actually buys the base currency while selling the quote currency. The buy price denotes how much of the reference currency is needed for a trader to acquire one unit of the base currency.

On the other hand, selling a currency pair means that a trader sells the base currency and get the quote currency. The sell price of the currency pair indicates how much the trader will avail in the quote currency for trading one unit of the base currency.

Say for example, the USD/EUR pair is quoted 1.5 and a trader decides to purchase the pair. This would mean that for every 1.5 euros sold, the trader receives $1. Conversely, if the trader move to sell the currency pair, the trader would earn 1.5 euros for every $1 sold. 

Most Traded Currency Pairs

Trade12, offers the most traded currency pairs in the world and a variety of currency pairs that forex traders can choose from.

In the Forex market, there are seven most traded currency pairs, including the four most popular or major pairs.

Here are the well known currency pairs, or widely called as the major currency pairs:

  • EUR/USD - (euro/dollar)
  • USD/JPY -(U.S. dollar/Japanese yen)
  • GBP/USD - (British pound/dollar)
  • USD/CHF - (U.S. dollar/Swiss franc)

 

Below are the three commodity pairs, which are less popular in the Forex market:

  • AUD/USD - (Australian dollar/U.S. dollar)
  • USD/CAD - (U.S. dollar/Canadian dollar)
  • NZD/USD - (New Zealand dollar/U.S. dollar)

Trading in the currency market could be a bit risky, choose the best forex broker and sign up for a live account with Trade12.com. We provide all the necessary tools and services for your online trading success!