What are forex currency pairs?
When you trade forex, you are simultaneously buying one currency and selling another. This is done in pairs.
The base currency is always first in the pair and has a value of one.
The quote currency is always second and fluctuates based on the exchange rate.
The most commonly traded pairs are called the Major Pairs. All major pairs have the US Dollar. These pairs include EUR/USD, GBP/USD, USD/JPY, USD, CHF, AUD/USD, NZD/USD, and USD/CAD.
Cross Currency Pairs are all majors, but without the US Dollar. These cross currency pairs include EUR/GBP, EUR/CHF, EUR, JPY, GBP/CHF, GBP/JPY, and CHF/JPY.
Exotic Pairs contain one major pair currency and one emerging currency. Some examples are USD/TRY (Turkish Lira), USD/ZAR (South African Rand), USD/SGD (Singapore Dollar), and USD/MXN (Mexican Peso).
The major pairs make up about 85% of the forex market. If you’re just starting out with forex, it’s best to start with the majors because of the high trading volumes and volatility, which creates multiple trading opportunities.