In forex, currencies are always traded in pairs, like EUR/USD. A pair shows how much of one currency you need to buy one unit of the other. Pairs are grouped into major, minor and exotic, depending on which currencies are in them.
The pair you pick decides how fast the price moves and how much it costs you to trade. Major pairs are the easiest and cheapest. Exotic pairs are the hardest and most expensive.
The first currency is the base. The second is the quote. The price tells you how much of the quote currency you need to buy one unit of the base.
This means 1 euro costs 1.10 US dollars. If you buy the pair, you buy euros and sell dollars. If you sell the pair, you do the opposite.
These pairs all include the US dollar and another big currency. They are the most traded pairs in the world.
- 1EUR/USD (euro / US dollar)
- 2GBP/USD (British pound / US dollar)
- 3USD/JPY (US dollar / Japanese yen)
- 4USD/CHF (US dollar / Swiss franc)
- 5USD/CAD, AUD/USD and NZD/USD
Minor pairs, also called cross pairs, do not include the US dollar. They are made from other big currencies.
- 1EUR/GBP (euro / British pound)
- 2EUR/JPY (euro / Japanese yen)
- 3GBP/JPY (British pound / Japanese yen)
- 4EUR/CHF and AUD/JPY
An exotic pair has one major currency and one currency from a smaller or emerging economy.
- 1USD/TRY (US dollar / Turkish lira)
- 2USD/ZAR (US dollar / South African rand)
- 3USD/MXN (US dollar / Mexican peso)
- 4USD/SGD (US dollar / Singapore dollar)
Spreads are wide, prices can jump suddenly, and it can be harder to get out of a trade.
- 1Start with one major pair, like EUR/USD, and learn how it moves.
- 2Check the spread before you trade. A lower spread means a lower cost.
- 3Avoid exotic pairs until you have some experience.
- 4Do not trade too many pairs at once.
- 5Remember that some pairs move together, so trading them all adds up your risk.
- A pair you know well is better than ten you barely understand.
- Cheap and simple pairs give beginners more room to learn.
- A wider spread means the price has to move more before you make a profit.
- So a smart trader remembers:
Q – 04 | What are base and quote currencies?
This page is for learning only and is not financial advice. Forex trading can lead to quick and big losses, and you can lose all the money you put in. Trade with real money only after you understand the risks.