Currency pairs that are located in the market for foreign exchange are used to measure how much one currency is worth against the other. A currency pair includes two currencies: first one is called ‘base’ and the second one is called ‘quote’. The price is displayed to show how much quote currency is needed to purchase one base currency unit.
The market for foreign exchange often referred to as the forex or currency (FX) market is biggest and most liquid market of the world for financial transactions that has more than $5 trillion value currencies that are traded every day across the world.
Forex is traded in different currency pairs. It is due to the fact that forex trading involves purchasing one while selling other currency. A currency pair could be considered an individual piece of equipment that can be bought or traded. Examples include euros as well as the US dollar (EUR/USD) as well as the British pounds along with the Japanese Yuan (GBP/JPY).
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What is the meaning of currency trading?
Currency trading is broken down into two distinct parts. The first currency of an exchange pair is referred to as base. It is that which the trader believes can fluctuate against the other currency. The second currency is referred to as the counter or quote currency.
Trading in currency includes two segments. In the case of example buying pounds against US currency (GBP/USD) and you’re expecting a rise in the value of the pound in the direction in the US currency. Profit and loss are typically calculated in relation to the currency used as a secondary currency used in trading. A price maker (usually referred to as a broker) offers a price that they will to purchase or sell the currency pair.
7 major foreign exchange pairs
There are a variety of different currency pairs that traders can pick from while placing orders on trading on the foreign exchanges. Key currency pairs refer to a pair that contains an element of US currency (USD) that currently is the biggest economy around the globe. Key pairs are among the most often traded currencies on the market. These are the seven key forex currency pairs considered as the topmost sought-after in the world. All of them can be traded with spread bets or CFDs:
- EUR/USD
- USD/JPY
- GBP/USD
- USD/CHF
- AUD/USD
- USD/CAD
- NZD/USD
Major pairs comprise 75 percent of all trades in forex. They have the highest liquidity and are extensively traded on the market for forex. They account for the majority of FX trades. Since these pairs are the ones with the highest amount of sellers and buyers and also, they normally have the most tight spreads, with bid (buy) as well as ask (sell). It is the spread between buy and sell prices. Many traders have of the opinion with the fact that the highest-profit pairs of forex to trade comprise the above seven forex currency pairs.