When first learning about trading currency in the Forex market, it is not unusual for your head to spin. Like learning anything new, there is a period of total confusion, followed by a little bit of clarity, followed by the first brightness of all the bits of information beginning to come together.
To help you in your learning, I have compiled a list of the symbols of the most-traded currencies. The symbol is in first place, followed by the country and lastly the common name and the name of the currency in particular. Of these countries, currencies are involved in the highest number of transactions processed on the FX each day:
USD united States Dollar Buck
EUR Euro Fiber
JPY Japan Yen Yen
Swiss CHF, swiss franc, Franc
CAD Canadian dollar canadian Dollar
AUD Australia Australian Dollar
GBP Great Britain Pound Cable
NZD New Zealand Dollar Kiwi
Each Forex currency symbol of three letters. The first two describe the country and the third the name of the country of the currency.
The currency is in the first position of a pair. You may also see it called the accounting, domestic or the primary currency. The second in the pair is called the quote or counter currency. The currency rate is the amount of that currency required to purchase one unit of the base currency.
Together, these 6 major Currency pairs account for 90% of all Forex transactions:
EUR/USD: the Euro and the dollar.
– GBP/USD: the pound sterling and the u.s. dollar.
– USD/JPY: the U.S. dollar and the Japanese yen.
– USD/CHF: US dollar and the Swiss franc.
– AUD/USD: the Australian dollar and the us dollar.
– USD/CAD: the U.S. dollar and the Canadian dollar.
Because the dollar is the base or the counter currency in the 85% of Forex trading, which means that it is in all the major pairs. Any pairs without the USD are called ‘cross rates.’ This is how Investopedia, explains a cross rate:
“If the exchange rate between the Euro and the Japanese Yen was quoted in an American newspaper, this would be considered a cross rate in this context, because neither the euro or the yen is the currency of the united states (U. S. However, if the exchange rate between the euro and the U. s. dollar were quoted in
that same newspaper, it would not be considered a cross rate because the quote involves the U.s. official currency.”
What is the best pair for beginning traders?
The currency pair to start trading with the EUR/USD, for two reasons:
1. Due to that EUR/USD is the most commonly traded pair, which means the liquidity is high and the spread, which is cost, is generally low.
2. Because extensive data is available in both currencies, so it is easy to access financial news and alerts. The second most traded that a beginner might choose to start with is GBP/USD.
Whichever pair you choose, do try to stay with one pair when you are just starting out. If you try to follow too many pairs to start, it makes it very difficult to stay on top of the new, prices and trends.