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Currency Pairs

 

All 180 currencies are abbreviated by their unique names. For instance, US Dollars are USD, Euros are EUR and British Pounds are GBP. Here is a brief summary of each abbreviation.

ABBREVIATION COUNTRY CURRENCY
USD United States Dollar
EUR Eurozone Euro
JPY Japan Yen
GBP Great Britain Pound
AUD Australia Dollar
CAD Canada Dollar
CHF Switzerland Franc
CNH China Yuan
MXN Mexico Peso
SEK Sweden Krona
NZD New Zealand Dollar
SGD Singapore Dollar
HKD Hong Kong Dollar
NOK Norway Krone
TRY Turkey Lira
ZAR South Africa Rand

 

Trading forex means buying one currency and simultaneous selling another.

It is essential to remember how currency pairs are expressed and traded.

EUR / USD

(Base currency)     (Quote currency)

Base currency

The currency in which the exchange rate is to be displayed is the base currency of the trading.

Quote currency

The currency is exchanged for a base currency with gains and losses

 

With the exchange rate, a trader will decide how much of the quote currency they require to buy the base currencies.

In general, the eight most traded currencies (in no specific order) are the U.S. dollar (USD), the euro (EUR), the Japanese yen (JPY), the British pound (GBP), the Australian dollar (AUD), the Canadian dollar (CAD), the Swiss franc (CHF) and the New Zealand dollar (NZD).

There are the most frequently traded currency pairs in the world

 

FX Symbol Country Trading Terms
EUR/USD Eurozone / United States Euro dollar
USD/JPY United States / Japan Dollar yen
GBP/USD United Kingdom / United States Pound dollar
USD/CHF United States / Switzerland Dollar swissy
USD/CAD United States / Canada Dollar loonie
AUD/USD Australia / United States Aussie dollar
NZD/USD New Zealand / United States Kiwi dollar

 

The advantage of trading popular currency pair is that the more people trade, the lower spread they get.

Forex is a two-way revenue structure. You can make profits both ways whether the exchange rate goes up or down.

For example, suppose the exchange rate for AUD/JPY is 81.386 – 81.417. Investors will buy AUD/JPY at 81.417 if they expect the Australian dollar to rise. If the exchange rate rises to 82.417 they will get 100,000 yen. Investors can sell AUD/JPY at 81.386 if they expect the Australian dollar to fall. If the exchange rate falls to 80.386 they will get 100,000 yen as well.

 

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