Currency Pairs | Understanding Currency Trading Pairs.
Before going to trade in Forex Market, you must understand currency pairs.
So they are most popular in Forex trading.
It surprised me when I asked a question to many of my new students as well as investors about it.
They failed to answer the above-asked question regarding currency pair.
As well as years in forex, but they don’t know what it is yet.
WHAT IS THE CURRENCY PAIR
So currency pairs are the foundation of Forex trading. They are paired up and then compare.
The first currency in the pair is the base currency, and the second currency is the quote currency, or sometimes counter currency.
While buying a currency pair, EUR / USD = 1.25340 indicates that you can buy one unit of a Euro by 1.25340 US dollars.
When selling a currency pair, EUR / USD = 1.1800, the exchange rate shows how many units of the quote currency you will receive when selling one unit of the base currency.
The bid price is the rate that your broker is willing to pay for the currency pair; in other words, this is the rate you receive if selling to the market.
The asking price is the rate at which your broker is willing to sell and represents the rate you must pay to buy the currency pair.
The bid price is always less than the offer price.
This difference – known as the spread– is how your broker generates much of its revenue.
In this example, the bid is 1.1051 dollars to each euro, while the ask is 1.1053 dollars to each euro.
The illustration at the top of this line shows how brokers typically display a currency pair to show the current bid and ask price.
WHAT ARE THE MAJOR CURRENCY PAIRS
Major currency pairs are those that involve the US Dollar.
Besides, all of these seven pairs have the US dollar
involving as a common currency.
The US currency traded over 95% in forex the market.
The seven most commonly traded currency pairs can group into “Majors.”
The EUR / USD and (USD/JPY) is another famous pair.
WHAT ARE THE CROSS CURRENCY PAIRS
They do not include the US dollar, and they are commonly Cross Pairs.
And some of them move very slowly and trend very well and another move very quickly and extremely volatile.
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