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Currency pairs

Currency pairs

Forex is all about attempting to speculate on the fluctuating currencies between two different countries. These two currencies are usually referred to as ‘currency pairs’ and these pairs are made up of the base currency and the quote currency. The future exchange rate and exchange rate fluctuations are core fundamentals to get under the belt.

The most traded currency pairs of all are the Euro against the US Dollar, which is represented as EUR/USD. The first currency set that appears in the Forex pair is the base currency, this is the one that is bought or sold for the quote currency.

Some of the most popular currency pairs include EUR/USD, the USD/JPY (US Dollar and the Japanese Yen), GBP/USD (British Pound and the US Dollar), and the USD/CHF (The US Dollar and the Swiss Franc). USD / CAD ( US Dollars to Canadian Dollars)

Another great characteristic of major currency pairs is that there is almost always a smaller risk of them getting manipulated.

The most popular currency pairs are called Major pairs and essentially make up 80% of the entire trading amount in the Forex market.
Major pairs include USD/CAD, EUR/USD, USD/JPY, GBP/USD, EUR/GBP, EUR/JPY, and USD/CHF.

Cross-currency pairs also known as Crosses, are pairs that do not include the US Dollar, which immediately makes them more volatile and less liquid than the other major currencies. While the US Dollar features in every major pair, Crosses is usually more concerned with more of the ‘minor’ currencies such as the EUR, the GBP, etc.

Some popular pairs in the Crosses family include the EUR/GBP, the GBP/JPY, and the EUR/JPY.

Position trading is essentially a trade that is in progress currently. In trading, the two positions are categorized as long and short positions.

Long position: is when the trader has already bought a currency while expecting that it will increase, once the currency is traded and sold back, the long position is closed.
Short position: is when the trader has already sold a currency while expecting that it will decrease. After the currency is bought back, the short position is closed.

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