Currency Pairs – Forex trading is now the smartest way to earn a decent payout. Currency is the unit of this trading. The most-traded currencies which are used in Forex trading are imported from several continents. Those continents are the strongest countries in terms of economy, development, and growth. We have the safe-haven currencies, i.e., traded forex currency pairs , and it is necessary to mention that these are the secure and steady traded links of all the times.
Currency Pairs- The Basics of Trading
Currency pairs are the fundamentals of every trading platform. These pairs estimate the values of currencies to one another. One is known as the base currency in this pair, and the other one is known as the secondary quote currency.
We can provide an example for your convenience. Let’s assume the pair EUR/ USD. Here, the quoted currency is the US dollar and the base currency is Euro. Now the pricing list of this pair shows the amount of the quoted currency, i.e., the Us dollar, required to buy a single unit of the base currency, i.e., the Euro.
Each currency pair consists of the bid and ask price. The bid price signifies the maximum price that a buyer will be interested in paying for the currency pair.
The asking price is known as the minimum price that the seller will accept for the currency pair. There is a difference between this bid price and the asking price. That one is known as the bid-ask spread.
Most of the time, Forex traders, especially the pro traders, are interested in trading with a lower spread pair. There is a valid reason behind this. Lower bid-ask spread reduces the amount of overall cost which is involved in trading.
There are some traders too who want to deal with the volatile currency pairs. This type of trade with a wider spread and lower liquidity can earn more profit when there is a fluctuating gap.
Popular Currency Pairs for the New Traders
USD or Us dollar is the most prominent currency. That’s why almost all the forex pairs consist of USD, may it be the base currency or the quote currency. Here we will discuss the major Forex traded currency. The beginners will get the advantage of knowing a wholesome idea on trading with currency pairs.
We will talk about the top traded five currency pairs.
The US dollars and the Japanese yen, combined as “The Gopher” are the best-known forex currency pairs. JPY is widely famous in Asiatic areas while US dollars are prominent worldwide. These pairs are best known for their liquidity. In simple words, traders can buy and sell a huge range of these currencies which fluctuate not that much by their cost.
The combination of the Euro and the US dollar is known as “The Fiber”. These are the currency of the world’s two largest and economically strong continents- the United States of America and Europe. This currency is also widely traded for its low spread and high liquidity feature. If you are thinking of forex scalping, then this currency can help you to gain profit.
The British pound sterling and the US dollar combine to create the pair named “The Cable”. This is known as semi-volatile by its nature. There are frequent fluctuations in the price, pip movements, and exchange rates. These have pros and cons as well. Traders can gain too much if the trading is successful. But if somehow the trading goes down, there will be huge losses too. These pairs are admitted by Day traders and swing traders.
The Euro and the British pound sterling are paired by the name of “The Chunnel”. This one seems like a strong pair for trading. But after the Brexit situation in the economy, this pair became a volatile pair. The pro traders can choose it easily. There is a situation for this currency pair, the price rate can change with the announcement of the regional bank.
The US dollar and the Swiss franc team up as “The Swissie”. This pair is a perfect example of a safe haven for first-time traders. This pair is a widely known forex pair for traders in the region where economic certainty is not present. In case the market is stable, the Swissie pair will be in a less interesting area other than any major Currency pair.
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