When you’re first learning about Forex trading, it’s not uncommon for your head to spin. Like learning something new, there is a period of complete confusion, followed by a bit of clarity, followed by the first glimmer of all the information that begins to come together.
To help you in your studies, I have compiled a list of the most traded currency symbols. The symbol comes first, followed by the country and finally the common name and nickname of the particular currency. The currencies of these countries account for the largest number of transactions processed on FX each day:
EUR Euro Euro Fiber
JPY Japanese Yen Yen
CHF Switzerland Swiss Franc
CAD Canadian Dollar Moon
AUD Australian dollar Aussie
GBP British Pound Cable
NZD New Zealand Kiwi Dollar
Each Forex currency symbol has 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 of a pair. You can also see it as accounting, local or base currency. The second in the pair is called the quote or counter currency. The quote currency is the amount of that currency that is needed to buy a single unit of the base currency.
Together, these 6 major Forex pairs account for 90% of all Forex transactions:
– EUR/USD: Euro and US dollar.
– GBP/USD: British pound and US dollar.
– USD/JPY: US Dollar and Japanese Yen.
– USD/CHF: US dollar and Swiss franc.
– AUD/USD: Australian dollar and US dollar.
– USD/CAD: US dollar and Canadian dollar.
Because the US dollar is either the base or counter currency in 85% of Forex trades, that means it is in all major pairs. All non-USD pairs are called “cross rates”. Here’s how Investopedia explains the cross rate:
“If an exchange rate between the euro and the Japanese yen was quoted in a US newspaper, it would be considered a cross in this context, as neither the euro nor the yen is the US standard currency. However, if the exchange rate between the euro and the US dollar were quoted in
the same newspaper, will not be considered a cross rate because the quote includes the official currency of the United States.”
Which is the best pair for beginner traders?
The currency pair to start trading with is EUR/USD for two reasons:
1. Because EUR/USD is the most commonly traded pair, which means liquidity is high and the spread, which is your price, is usually low.
2. As enough data is easily available for both the currencies so it is easy to access financial news and alerts. The second most traded that a beginner can choose to start with is GBP/USD.
Whichever pair you choose, try to stick 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.