One of the largest and oldest international markets, foreign exchange market deals in various world currencies. Forex traders can buy and sell world currencies here and profit from the transactions. Currencies in forex market transactions are always depicted in pairs; for instance, GBP/USD, USD/EUR and USD/JPY are some popular currency pairs.
Interpreting Currency Pairs Quotations
The first currency shown in any currency pairs is the base currency, also called domestic currency or accounting currency. The second currency is the quote or counter currency. The base currency is a single monetary exchange unit, such as I JYP, 1 USD and so on. The quote currency, on the other hand, depicts the amount of quote currency that can buy one unit of the base currency. That is, currency pairs also depict bid and ask price. While bid price is the price at which a broker is ready to buy, ask price is the price at which a broker is ready to sell.
Pairs that do not have the USD as either base or counter currency is called cross currency; for instance, GBP/CHF and EUR/JPY are cross currencies. Since not all brokers deal with all types of currencies, do verify from your broker that they deal with the currency you are interested in.
For beginners, the best currencies to trade include Euro, British Pound, US Dollar, Japanese Yen, Australian Dollar, Swiss Franc and Canadian Dollar. Traders can also opt for daily expert opinion, advice and analytical data on the pairs they are trading in to enhance success.
Popular Currency Pairs
Some popular pairs to trade in the forex market include:
- GBP/USD (British Pound vs. US Dollar): A popular pair, this offers profitable pips and likely large jumps. However, it is also high risk and rather volatile. Its popularity stems from the vast amount of market research and analysis data available on the pair, which facilitates informed decision making.
- EUR/USD (Euro vs. US Dollar): Another popular pair, it has the lowest spread among brokers. It also comes with less risk and offers closer stops, as it is less volatile and follows technical analysis. Besides, getting exhaustive information on this pair is also quite easy.
- USD/JPY (US Dollar vs. Japanese Yen): Yet another traders’ favourite, this pair comes with low spreads and smoother trends. It also offers huge profit-making opportunities.
These popular currency pairs also create liquidity that is essential for making daily profits in the forex market.
Autotrade the FOREX market like never before!
Let ZuluTrade drive trades by specialists into your FX account
FOR FREE!