Two currencies paired against one another to make up an exchange rate. The first pair listed is called the base and the second pair is called the quote. In the currency pair GBP/USD the base is GBP and the quote is USD. When paired, it will show how much the quote currency needs to purchase one unit of the base currency.
The USD paired with an emerging country’s currency. The spread is extremely high due to its lack of liquidity.
How fast something can be bought & sold for and how fast it can be converted into cash. A liquid market is a calculation of how many buyers and sellers are in the market actively placing trades. The more trades that are being taken, the higher the liquidity is in the market.
A market giving a high volume of trade opportunities.
BeginnerEarly Stages For Beginners8 Topics
Forex Terminology11 Topics
- Major and Minor Currency Pairs
- Basic Forex Terminology
- Pips & Ticks
- The Broker & The Spread
- What is a Lot?
- Stop Loss & Take Profit
- Margin & Leverage
- Retracement & Reversal
- When Can I Trade Forex? Sessions - Market Open and Close
- 3 Types of Analysis (Technical, Fundamental, Sentiment)
- 3 Ways a Market Can Go (Up, Down, Sideways)
Margin & Leverage2 Topics
IntermediateIdentifying Scams2 Topics
Brokers for Beginners5 Topics
Technical Analysis13 Topics
- Types of Charts
- Understanding Japanese Candlesticks
- Candlestick Patterns For Beginners
- Single, Double & Triple Candlestick Patterns
- Support and Resistance
- Confluences w/ Candlesticks & Support & Resistance
- Counter Trend Trading/ Counter Trend Lines
- Moving Average
- Top-Down Analysis
- Consolidation Trading (Breakout, Retest, Continuation)
AdvancedUsing Indicators6 Topics
Technical Analysis (Part 2)8 Topics
Market Structure5 Topics
Fundamental Analysis9 Topics
CompletionRisk Management for Beginners8 Topics
Psychology for Beginners7 Topics
Personal Psychology Questions2 Topics
Major and Minor Currency Pairs
So you’re excited to learn Forex! Well let’s really start learning. You already know that in Forex, you’re buying one currency pair and selling the other. Let’s actually give you examples of pairs you’ll be trading!
In Forex, there’s a thing called: “MAJOR” currency pairs and “MINOR.” The major currency pairs are the most widely traded pairs in the world whereas the minors aren’t traded as much, even though they’re very popular due to their popularity.
Major Currency Pairs:
Since the United States has the largest economy in the world and is also the reserve currency of the world, the 7 majors all have the United States attached to it. Since they are widely traded, they typically offer the lowest spreads. Keep this in your mind:
More people trading it = More liquid & more steady
Less people trading it = Less liquid and More volatile
NOTE: The less liquidity a pair has, the more volatile it is.
Anyway, let’s talk about the majors!
EUR/USD – Euro/US Dollar (Europe/United States)
USD/CHF – US dollar/Swiss Franc (United States/Switzerland)
USD/JPY – US dollar/Japanese Yen (United States/Japan)
GBP/USD – British Pound/US Dollar (Great Britain/United States)
USD/CAD – US Dollar/Canadian Dollar (United States/Canada)
AUD/USD – Australian Dollar/US Dollar (Australia/United States)
NZD/USD – New Zealand Dollar/US Dollar (New Zealand/United States)
So basically… pay attention to the US Dollar. They’re involved in almost 85% of the transactions you hear about in the Forex market.
As far as minor currency pairs, they don’t include the US Dollar at all; and even though they don’t include the US Dollar, they’re still pretty liquid. They DO have wider spreads though.
Minor Currency Pairs:
EUR/GBP – Euro/British pound
EUR/AUD – Euro/Australian dollar
GBP/CAD – British pound/Canadian dollar
GBP/AUD – British pound/Australian dollar
EUR/JPY – Euro/Japanese yen
GBP/JPY – British pound/Japanese yen
These are just a few examples! There are PLENTY more minor pairs to trade in the Forex market. Usually pairs that are popular but don’t regard the US Dollar are the minors when they’re paired together. (like the Euro Dollar, The Great Britain Pound, the Japanese Yen, the Australian Dollar, The Swiss/Switzerland Franc and the New Zealand Dollar).
Although there are a lot of minor pairs, the 7 major pairs you read above, are the only major pairs in the Forex market. There aren’t any extra majors!
Exotic pairs are a thing believe it or not but you probably will NEVER trade an exotic pair. The US Dollar is ½ of the pair with exotic pairs, but the unfortunate part is, the other ½ is an emerging country. Countries such as Thailand, Brazil & Mexico would be considered “exotics.” If you see anything with your Forex broker that shows USD/MXN (Mexico), USD/THB (Thailand) or USD/BRL (Brazil), stay far away from it. The spreads are astronomical as they are extremely volatile and there are not many trade setups.