The crosses that trade the most volume are among the currency pairs in which the individual currencies are also majors. Exotic currency pairs include currencies of emerging markets. These pairs are not as liquid, and the spreads are much wider. Bank for International Settlements.
Accessed Feb. Your Money. Personal Finance. Your Practice. Popular Courses. Table of Contents Expand. Table of Contents. What Is a Currency Pair? Understanding Currency Pairs. Major Currency Pairs. Minors and Exotic Pairs. Part of. Part Of. Basic Forex Overview. Key Forex Concepts. Currency Markets. Advanced Forex Trading Strategies and Concepts. Key Takeaways A currency pair is a price quote of the exchange rate for two different currencies traded in FX markets.
When an order is placed for a currency pair, the first listed currency or base currency is bought while the second listed currency in a currency pair or quote currency is sold. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.
We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Terms Reciprocal Currency A reciprocal currency in the foreign exchange market is a currency pair that involves the U. What Is a Quote Currency?
A quote currency, commonly known as "counter currency," is the second currency in both a direct and indirect currency pair. Foreign Exchange Forex The foreign exchange Forex is the conversion of one currency into another currency. Counter Currency The counter currency is the second currency in a quoted currency pair. The euro against the US dollar is a widely traded major forex pair. In this instance, the euro is the base currency and the US dollar is the quote currency. To buy one unit of the base currency, the trader will have to pay 1.
Conversely, if the trader wishes to sell one euro, they would receive 1. Read more examples of short selling currencies using spread bets and CFDs. Expecting major economic announcements? Our forex indices are a collection of related, strategically-selected pairs, grouped into a single basket. The whole market runs electronically, through a network of banks.
It also runs continuously for 24 hours a day, five days a week. Learn more about how you can take advantage of forex trading hours. Traders seek out the best foreign exchange rate. These rates are supplied by global banks and updated in time periods of less than a second; the forex market is extremely fast-paced.
Commodities can also have an effect on currency pair prices. Commodity currencies are those from countries that have large quantities of commodities or other natural resources. The exchange rate of the currencies of these countries are tied to their respective export activities.
This is because the strength of the economy can be highly dependent on the prices of their natural resources. Examples of these countries include Russia, Saudi Arabia and Nigeria. In the forex market, no single currency pair is traded completely independent of the others.
It is useful to get a better understanding of currency correlations and gain an insight into the relationship between currency pairs. Considering whether they are negatively or positively correlated, or if they are likely to move in the same direction, opposite directions, or completely randomly could be useful. These are all things to take into consideration when trading on currency pairs.
FX trading allows traders to speculate on all the major currency pairs. The only limit to which currency pairs can be traded are the pairs and quantity offered by the trading platform individual traders choose. The three main types of currency pairs are majors, minors crosses and exotics. The major currency pairs are often the most popular to trade, as they are the most liquid. That is to say these pairs have the highest trading volume.
Minor currency pairs are ones which leave out the United States dollar, and they are normally less liquid. Cross pairs can provide trading opportunities when the majors are presenting less favourable conditions.
There are also exotic currency pairs. These are the least traded in the forex market, and are less liquid than the cross pairs. The movement in major forex pairs is often more predictable within the FX market, due to the vast amount of knowledge and research that traders have collected over the years. See our guide to the most traded currency pairs. There are several strategies you could use when trading on currency pairs, depending on the length of the trade, the specific pair and the size of your position.
Check out our list of forex trading strategies to find one that suits your trading personality and goals. However, some currencies are stronger in value than others and can act as a safe haven for investors in times of instability. Read our guide to the 16 strongest currencies in the world. We offer over forex pairs to trade on our online trading platform, which include major, minor and exotic crosses.
You can spread bet or trade CFDs on our currency pairs: visit our forex trading page for more information on costs, spreads and margin rates. A wide spread between currencies indicates volatility, whereas a narrow spread means that there is a smaller difference between the bid and ask price. Most traders prefer a tighter or narrower spread, as it indicates lower volatility but high liquidity.
Our forex trading page has a breakdown of all spreads and margins that we offer on our currency pairs. See why serious traders choose CMC. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. Personal Institutional Group Pro. United Kingdom. Start trading. What is ethereum?
What are the risks? Cryptocurrency trading examples What are cryptocurrencies? The advance of cryptos. How do I fund my account? How do I place a trade? Do you offer a demo account? How can I switch accounts? CFD login. Personal Institutional Group. Log in. Home Learn Trading guides Forex pairs. Forex currency pairs Currency pairs, which can be found within the foreign exchange market, measure the value of one currency against another.
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High volumes lead to reduced price differences between the bid and offer. The Yen is often used by carry traders who borrow the Yen and invest it into higher yielding currencies. The Bank of Japan has had to combat low inflation and growth for many years, and as a result it has a very low interest rate. The Yen is also known as a safe-haven currency amongst traders.
Commodity currencies like the Aussie, Loonie and Kiwi are forex pairs that are greatly influenced by commodity prices. The Aussie also tends to do well when China does well because the two countries are big trading partners. Interestingly, the Canadian dollar is closely tied to the US economy. Cross currency pairs do not include the US Dollar. Historically, currencies had to be exchanged into US dollars before they could be exchanged into other currencies.
This cross pair explores the relationship between the UK economy and the European Union. The main fundamentals that affect currency pairs are changes in overnight interest rates by central banks, economic data and politics. Interest Rates - Central banks have it in their mandate to maintain monetary and financial stability.
They do this by influencing interest rates. When a central bank increases its overnight interest rate it causes increased demand for that currency because investors and traders seek the higher yield which in turn appreciates the currency relative to other currencies. Important economic data that influences currency rates include CPI inflation data, Nonfarm payrolls employment data , gross domestic product GDP , retails sales, purchasing managers index PMI and others.
Politics - Trade wars , elections, corruption scandals and changes in policies introduce instability which reflects in the forex market. Volatility - Traders usually take smaller positions on the more volatile currencies and bigger positions on less volatile positions. Volatility can strike any of these pairs at any time due to abrupt changes in interest rates, drastic changes to the economic outlook, or political instability. It is important to follow these markets dedicated pages above for up to date news and analysis.
Forex traders utilize discipline and consistency in their trading. Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances.
Forex trading involves risk. Losses can exceed deposits. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. Live Webinar Live Webinar Events 0. Economic Calendar Economic Calendar Events 0. Duration: min. P: R:. Search Clear Search results. No entries matching your query were found. Free Trading Guides.
Please try again. Subscribe to Our Newsletter. Frederick Dixon. Plz were can I find more of your blogs Victor Gryazin. Wilberforce Nsabiyumva. It is high time to look around while there are not much statistics around. The pair can be traded by fundamental or tech analysis and with the help of indicators. This article explains what NFTs are and shares a Top 5 list of companies connected to non-fungible tokens.
This new exchange market week will be full of statistics. Investors will keep analysing global economies and geopolitics. There are still too many emotions in quotes. The article describes the way of combining the EMA and Awesome Oscillator on H1, peculiarities of this medium-term trading strategy, and money management rules. Every week, we will send you useful information from the world of finance and investing.
We never spam! Check our Security Policy to know more. Try Free Demo. Contents What is a currency pair? The characteristics of major currency pairs How many currency pairs do we use in trading? What is a currency pair? The characteristics of major currency pairs Major currency pairs in Forex and the pairs that consist of the most popular currencies of the world economy. It is the most popular currency pair.
The trade volume of the currency pair is maximal here, while the spread is small and volatility is average. It is most active during the European and American sessions and reacts vividly on the news in the Eurozone. The Swiss franc is a safe-haven asset, thus the pair may go down during crises. It is most active during the European and American sessions. The currency pair has increased volatility and is popular among traders. It may demonstrate mighty movements of several patterns or trigger nearby Stop Losses by false breakaways.
The pound reacts dramatically to political events and economic data in Britain. The pair is most active during the European and American sessions. The Japanese yen is quite a peculiar currency that might move counter all other major pairs. It is a safe-haven asset, so it is prone to decline during crises and, vice versa, grow in the times of ascending dynamics in stock markets.
The pair is most active during the Asian session. The CAD is a commodity currency; its course correlates with the dynamics of oil prices. The growth of oil drags down the pair, while the falling of oil pushes it up. It is most active during the American session. These currency pairs have very similar behavior. Normally, they are calm, influenced by the prices of metals and powdered milk.
They are most active during the Asian session. How many currency pairs do we use in trading? I think, there are two approaches to the issue depending on your trading style: Minimum pairs This approach is based on the fact that each currency pair is peculiar, and the nuances of its behavior may be studied if you focus on one or two pairs.
A wide range of pairs This approach is based on the use of certain trading patterns , Price Action patterns , candlesticks , etc. The criteria for choosing currency pairs Certain criteria and characteristics of currency pairs will help you pick up the most suitable ones. To me, the following three criteria seem the most important: Time of activity Each currency pair has the time when it is most active. Volatility Volatility is the fluctuation range of a currency pair during a certain time.
The cost of a trade Another important criterion for choosing currency pairs is the cost of a trade. Material is prepared by Victor Gryazin Has traded in financial markets since You can start from our articles here. We have almost articles right now. Further reading Stocks. How to Avoid Traps for Bulls and Bears. Subscribe to R Blog and never miss anything interesting Every week, we will send you useful information from the world of finance and investing.