Forex trading consists of buying and selling two currency pairs simultaneously. Currencies are traded via a broker and are traded in pairs; for example, Euro and US Dollar (EUR/USD) or British Pound Sterling against Japanese Yen (GBP/JPY).
When you trade in the Forex market, you buy or sell currency pairs.
Imagine each pair in constant battle with each motto at the end of each string. Exchange rates fluctuate according to the strongest currency at the moment.
The “major” currency pairs (Majors)
The currency pairs listed below are considered “major”. These pairs all contain the US dollar (USD) and are most often traded. The “majors” are the most liquid and widely traded in the world.[table “” not found /]
Combinations of “major” or minor currency pairs
Currency pairs that do not include the US dollar (USD) are known as “combined currency pairs” or simply “combinations”. Combinations of “major” are also called “minor”. The most traded combinations are derivatives of the three major currencies (except dollar): EUR, JPY, and GBP.
Combinations with the Euro[table “” not found /]
Combinations with the Yen[table “” not found /]
Combinations with Pound[table “” not found /]
Other combinations[table “” not found /]
Exotic” currency pairs
No, exotic pairs are not belly dancers or oriental twins. Exotic currencies are made up of a major currency on par with that of an “emerging” country or an emerging economy, such as Brazil, Mexico or Hungary. The graph below shows some examples of these exotic pairs. Do you want to try to guess the name of the exotic currency according to its symbol?
It is good to know what these exotic currencies are. Keep in mind that these pairs are not as much trades as “majors” or “combinations”, which justifies the much higher transaction costs.
It is not unusual to see spreads two to three times higher than those on the EUR/USD or USD/JPY. If you want to trade exotic currency pairs, remember before you make your decision.