Do not know where to start Forex trading? Read the article about the major currency pairs in Forex Exchange! Currency is the most traditional trading instrument trusted worldwide. Learn how to read currency exchange rates, find out how to trade currency pairs, what is the best time for trading currencies, and what makes a currency pair liquid.
Main article sections
- What is a currency pair
- Major currency pairs
- Factors influencing the currency price movements
- How to trade currency
- Trading characteristics of major currencies
- The role of the currency pair liquidity
- How to start currency trading
What is a currency pair
A currency pair is the quotation of two different currencies. For example, EURUSD. The value of one currency is quoted against the other. The base currency is the first listed (EUR), the quote currency is the second listed (USD). Every currency has a three-letter ISO (International Organization for Standardization) symbol, and it is pretty simple, look: USD - the U.S. dollar, JPY - the Japanese yen, AUD - the Australian dollar, CAD - the Canadian dollar, and GBP, the British pound, stands for the currency of Great Britain.
How to read currency pairs? The quotation EUR/USD = 1.12 means that one euro can be exchanged for 1.12 U.S. dollars. The number reflecting the difference in value is an exchange rate, and in our case, it is equal to 1.12. That means that having 1 euro you can buy 1.12 U.S. dollars.
In theory, either currency can come first and the rate will be shown inverted if the order is reversed, for example, USD/EUR=0.89. However, there are commonly-adopted conventions reflecting traditionally strong currency versus a traditionally weak currency, where the strong currency is coming first.
Major currency pairs
Currently, there are about 180 legal currencies used in the world. In theory, it is possible to exchange one currency with 179 other different currencies. MTrading offers you 38 most popular currencies to trade. The most traded currency pairs in the world are called the 'majors'. They involve the following currencies: euro (EUR), U.S. dollar (USD), Japanese yen (JPY), pound sterling (GBP) and some more. Some of the major currency pairs are listed below according to their decreasing trading popularity:
The EUR/USD is the world's most popular Forex pair. Currencies in that pair represent the world's two largest economic entities - The European Union and The United States. The U.S. dollar and euro make up a great percentage of trades all over the world.
The USD/JPY is the second world's popular currency pair. The Japanese economy ranks the third-largest in the world by nominal GDP. Moreover, Japan is the fourth-largest purchasing power parity (PPP) and a large international trading hub, so multinational corporations invest in the Japanese economy in great volumes, making JPY a high-demand currency.