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What is a 'Currency Pair'.

A currency pair is the quotation of the relative value of a currency unit against the unit of another currency in the foreign exchange market. The currency that is used as the reference is called the counter currency, quote currency or currency [1] and the currency that is quoted in relation is called the base currency or transaction currency. In a currency pair, the first currency is called the base currency and the second is the quote currency, a longtime convention for EUR/USD forex traders.

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The way FX pair notation is quoted always means exchange that many units of the denominator currency for 1 unit of the numerator currency. Absolutely no exceptions. You could quote either GBP/USD or USD/GBP, but the numbers are not going to be the same (they will be inverses of each other).

The most traded pairs of currencies in the world are called the Majors. In everyday foreign exchange market trading and news reporting, the currency pairs are often referred to by nicknames rather than their symbolic nomenclature. These are often reminiscent of national or geographic connotations. GBP is also referred to by traders as quid. The following nicknames are common: Nicknames vary between the trading centers in New York, London, and Tokyo.

Currencies are traded in fixed contract sizes, specifically called lot sizes, or multiples thereof. The standard lot size is , units.

Many retail trading firms also offer 10,unit mini lot trading accounts and a few even 1,unit micro lot. The officially quoted rate is a spot price. In a trading market however, currencies are offered for sale at an offering price the ask price , and traders looking to buy a position seek to do so at their bid price , which is always lower or equal to the asking price.

This price differential is known as the spread. The spread offered to a retail customer with an account at a brokerage firm, rather than a large international forex market maker , is larger and varies between brokerages. Brokerages typically increase the spread they receive from their market providers as compensation for their service to the end customer, rather than charge a transaction fee.

A bureau de change usually has spreads that are even larger. In the above case, someone buying 1 EUR will have to pay 1. A pair is depicted only one way and never reversed for the purpose of a trade, but a buy or sell function is used at initiation of a trade. Therefore, currencies are quoted in terms There are many official currencies that are used all over the world, but there only a handful of currencies that are traded Read about the causes of currency devaluation, and find out how to differentiate between relative and absolute currency devaluation.

Learn about the most traded currencies and the strategies used to trade them. Knowing the relationships between pairs can help control risk exposure and maximize profits. Trading in the currency market isn't easy. We tell you what you need to know before starting.

Every currency has specific features that affect its underlying value and price movements in the forex market. The most widely traded currencies are represented on the grid below: Not to be confused with major currencies are the major currency pairs.

Understanding The Forex Majors 12 of Reading a Forex Quote. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Take a free trading course with IG Academy. Our interactive online courses help you develop the skills of trading from the ground up.

Develop your trading knowledge with our expert-led webinars and in-person seminars on a huge range of topics. A demo account is intended to familiarize you with the tools and features of our trading platforms and to facilitate the testing of trading strategies in a risk-free environment. Results achieved on the demo account are hypothetical and no representation is made that any account will or is likely to achieve actual profits or losses similar to those achieved in the demo account.

Conditions in the demo account cannot always reasonably reflect all of the market conditions that may affect pricing and execution in a live trading environment.

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GBP is also referred to by traders as quid. Historically, this was established by a ranking according to the relative values of the currencies with respect to each other [5] , but the introduction of the euro and other market factors have broken the original price rankings.

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The currency that is used as the reference is called the counter currency , quote currency or currency [1] and the currency that is quoted in relation is called the base currency or transaction currency. By continuing to use this website, you agree to our use of cookies.

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