If you look at the structure of Forex’s foreign exchange market quotes, you will see something like USD/EUR or GBP/USD. These are Forex currency pairs.
All Forex transactions, when one currency is bought and the other is sold, are performed with Forex currency pairs. For example, you buy euros for U.S. dollars in the hope that the price of the euro will rise against the U.S. dollar. So, if the euro strengthens against the dollar, you will sell it and make a profit.
Forex currency pair is a single unit, a tool that is sold or bought on the Forex market. Although many currency pairs are available in the Forex trading system, the most frequently traded Forex currency pairs are:
EUR / USD – euro against the US dollar
GBP/USD: British pound against US dollar
USD / JPY: US dollar against Japanese yen
USD / CHF: US dollar against Swiss franc
In Forex currency pairs, the value of a currency is determined by comparing it with another currency. When Forex currency pairs are specified, the first currency is called the base currency and the second currency is called the account currency or quotes. The base currency is always equal to 1 currency (e.g. 1 euro, 1 pound sterling, 1 U.S. dollar). The currency pair indicates how much currency is needed to buy one unit of the base currency.
Forex currency pairs are usually traded and quoted at the price of “bid” and “offer.” “Offer” is the price at which the broker is ready to buy, and “ask” is the price at which he is ready to sell.
For example, if the USD/EUR currency pair is listed as – USD/EUR q 1.5 and you buy a pair, it means that for every 1.5 euros sold you get 1 dollar. If you sell a currency pair, you will receive 1.5 euros for every U.S. dollar sold.
This is the first currency to be listed in the Forex currency pair. It is also known as a national currency or accounting currency and is sometimes referred to as the main currency of the Forex currency pair. For example, CAD/USD is a currency pair. Here, the Canadian dollar is the base currency and the US dollar is the currency of the exchange. The price indicates the portion of the quoted currency needed to obtain one unit of the base currency.
The main underlying currencies:
Euro – EUR / USD, EUR / GBP, EUR / CHF, EUR / JPY, EUR / CAD
British Pound – GBP /USD, GBP/CHF, GBP/JPY, GBP/CAD
US dollar – USD / CAD, USD / JPY, USD / CHF
This is the second currency quoted in the Forex currency pair. It is also called a foreign currency, secondary currency or counter currency.
The key to successful trading is choosing one or two currency pairs to trade. Of course, if you become an experienced expert, you may want to trade a lot of pairs, but a beginner is recommended to use one or two for simplicity. .