Forex trading is the simultaneous buying of one currency and
selling another. Currencies are traded through a broker or dealer, and are
traded in pairs; for example the euro and the U.S. dollar (EUR/USD) or the
British pound and the Japanese yen (GBP/JPY).
When you trade in the forex market, you buy or sell in currency
pairs. Exchange rates fluctuate based on which
currency is stronger at the moment.
Major Currency Pairs
The currency pairs listed below are considered the
"majors". These pairs all contain the U.S. dollar (USD) on one side
and are the most frequently traded. The majors are the most liquid and widely
traded currency pairs in the world.
|
Pair
|
Countries
|
FX Geek Speak
|
|
EUR/USD
|
Euro zone / United
States
|
"euro
dollar"
|
|
USD/JPY
|
United States /
Japan
|
"dollar
yen"
|
|
GBP/USD
|
United Kingdom /
United States
|
"pound
dollar"
|
|
USD/CHF
|
United States/
Switzerland
|
"dollar
swissy"
|
|
USD/CAD
|
United States /
Canada
|
"dollar
loonie"
|
|
AUD/USD
|
Australia / United
States
|
"aussie
dollar"
|
|
NZD/USD
|
New Zealand /
United States
|
"kiwi
dollar"
|
Major Cross-Currency Pairs or Minor Currency Pairs
Currency pairs that don't contain the U.S. dollar (USD) are known
as cross-currency pairs or simply as the "crosses." Major crosses are
also known as "minors." The most actively traded crosses are derived
from the three major non-USD currencies: EUR, JPY, and GBP.
Euro Crosses
|
Pair
|
Countries
|
FX Geek Speak
|
|
EUR/CHF
|
Euro zone /
Switzerland
|
"euro
swissy"
|
|
EUR/GBP
|
Euro zone / United
Kingdom
|
"euro
pound"
|
|
EUR/CAD
|
Euro zone / Canada
|
"euro
loonie"
|
|
EUR/AUD
|
Euro zone /
Australia
|
"euro
aussie"
|
|
EUR/NZD
|
Euro zone / New
Zealand
|
"euro
kiwi"
|
Yen Crosses
|
Pair
|
Countries
|
FX Geek Speak
|
|
EUR/JPY
|
Euro zone / Japan
|
"euro
yen" or "yuppy"
|
|
GBP/JPY
|
United Kingdom /
Japan
|
"pound
yen" or "guppy"
|
|
CHF/JPY
|
Switzerland / Japan
|
"swissy
yen"
|
|
CAD/JPY
|
Canada / Japan
|
"loonie
yen"
|
|
AUD/JPY
|
Australia / Japan
|
"aussie
yen"
|
|
NZD/JPY
|
New Zealand / Japan
|
"kiwi
yen"
|
Pound Crosses
|
Pair
|
Countries
|
FX Geek Speak
|
|
GBP/CHF
|
United Kingdom / Switzerland
|
"pound
swissy"
|
|
GBP/AUD
|
United Kingdom /
Australia
|
"pound
aussie"
|
|
GBP/CAD
|
United Kingdom /
Canada
|
"pound
loonie"
|
|
GBP/NZD
|
United Kingdom /
New Zealand
|
"pound
kiwi"
|
Other Crosses
|
Pair
|
Countries
|
FX Geek Speak
|
|
AUD/CHF
|
Australia /
Switzerland
|
"aussie
swissy"
|
|
AUD/CAD
|
Australia / Canada
|
"aussie
loonie"
|
|
AUD/NZD
|
Australia / New
Zealand
|
"aussie
kiwi"
|
|
CAD/CHF
|
Canada /
Switzerland
|
"loonie
swissy"
|
|
NZD/CHF
|
New Zealand /
Switzerland
|
"kiwi
swissy"
|
|
NZD/CAD
|
New Zealand /
Canada
|
"kiwi
loonie"
|
Exotic Pairs
No, exotic pairs are not
exotic belly dancers who happen to be twins. Exotic pairs are made up of one
major currency paired with the currency of an emerging economy, such as Brazil,
Mexico, or Hungary. The chart below contains a few examples of exotic currency
pairs. Wanna take a shot at guessing what those other currency symbols stand
for?
Depending
on your forex broker, you may see the following exotic pairs so it's good to
know what they are. Keep in mind that these pairs aren't as heavily traded as
the "majors" or "crosses," so the transaction costs
associated with trading these pairs are usually bigger.
|
Pair
|
Countries
|
FX Geek Speak
|
|
USD/HKD
|
United
States / Hong Kong
|
|
|
USD/SGD
|
United
States / Singapore
|
|
|
USD/ZAR
|
United
States / South Africa
|
"dollar
rand"
|
|
USD/THB
|
United
States / Thailand
|
"dollar
baht"
|
|
USD/MXN
|
United
States / Mexico
|
"dollar
peso"
|
|
USD/DKK
|
United
States / Denmark
|
"dollar
krone"
|
|
USD/SEK
|
United
States / Sweden
|
|
|
USD/NOK
|
United
States / Norway
|
|
It isn't
unusual to see spreads that are two or three times bigger than that of EUR/USD
or USD/JPY. So if you want to trade exotics pairs, remember to factor this in
your decision.
