When you first learn about forex currency trading, it is not unusual to turn your head. Like learning anything new, there is a period of complete confusion followed by a little clarity followed by the first flash of all bits of information beginning to gather.
To help your learning, I have compiled a list of the most traded currency symbols. The symbol first, followed by the country and finally the common name and nickname for the particular currency. The currencies of these countries participate in the largest number of transactions processed in foreign currencies every day:
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US dollar US dollar buck
Euro Euro Euro Fiber
Japanese yen Japanese yen
swiss francs swiss francs
Canadian Dollar Canadian Loonie
Australian dollars Australian dollars
sterling pound cable british pound
New Zealand Dollar New Zealand Kiwi
Each foreign currency symbol consists of three letters. The first two describe the country and the third the name of the currency of that particular country.
The base currency is in the first position for the pair. You can also see that it is called the accounting, local, or base currency. The second in the pair is called the quote currency or the counter currency. The quote currency is the amount of that currency required to buy one unit of the base currency.
Together, these six major forex pairs account for 90% of all forex transactions:
EUR/USD: the euro and the US dollar.
– Pound sterling / US dollar: the pound sterling and the US dollar.
USD/JPY: the US dollar and the Japanese yen.
USD/CHF: US dollars and Swiss francs.
– AUD/USD: Australian dollar and US dollar.
USD/CAD: the US dollar and the Canadian dollar.
Because the US dollar is either the base or the counter currency in 85% of forex trades, which means it is present in all major pairs. Any pairs without the US dollar are called “cross rates”. This is how Investopedia explains the cross price:
“If an exchange rate between the euro and the Japanese yen is quoted in a US newspaper, that will be considered a cross rate in this context, because neither the euro nor the yen is the standard currency of the United States. However, if the exchange rate between the euro and the US dollar is in
The same newspaper, it will not be considered a cross rate because the price includes US official currency.”
What is the best pair for beginner traders?
The currency pair to start trading with is EUR/USD, for two reasons:
1. Because the EUR/USD is the most traded pair, which means that the liquidity is high and the spread, which is the cost, is usually low.
2. Because abundant data is readily available on both currencies, so it is easy to access financial news and alerts. The second most popular trade a beginner might choose is the GBP/USD.
No matter which pair you choose, try to stay with one pair when you’re just starting out. If you try to follow too many pairs to begin with, it becomes very difficult to stay on top of new prices and trends.
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