Forex currency pairs explained
Forex currency pairs explained In forex trading, currencies are usually expressed in pairs (sometimes referred to as crosses). It is usually displayed as:
EUR/USD
In the above pair the euro is called the base currency and the dollar is the quote currency. The base currency has a value of 1 and the quote currency is the value it is equal to in the base currency.
For example, if the value of the EUR/USD pair is 1.08, then 1 euro equals 1.08 US dollars.
Forex Trading
New traders prefer major currency pairs due to the high liquidity and large amount of data available. News outlets often cover events affecting these currencies. Also many commodities including oil, corn, cotton (to name a few) and most precious and commercial metals are bought and sold in US dollars.
Forex currency pairs
Minor currency pairs include the currencies mentioned in the above list, but not the dollar. for example; AUD/JPY, EUR/CHF and EUR/GBP are minor pairs.
Minor pairs also provide large amounts of data, as most of the currencies in question are some of the most popular traded currencies in the market.
Exotic pairs include currencies from developing countries and a major currency, such as the USD/MXN.
These pairs can have less liquidity, depending on the currencies they are involved in, and are usually considered to be much more volatile than major pairs or crosses.
As such, exotic pairs prefer more experienced traders to supplement their portfolios with high-risk trades.
What is the bid and ask price?
Ask and Bid, also called Bid and Bid, is a method by which you quote prices in forex and other certain types of CFD trading.
When trading there are two parties, the seller and the buyer. The bid price is the maximum value at which the buyer is willing to “buy” the CFD and the ask price is the minimum value at which the seller is willing to “sell”. When these two prices match, the trade takes place.
The difference between these two prices or these two values is known as the price difference.
Floating spreads brokers usually change this amount depending on market liquidity, which can make calculating your profits and losses difficult and can increase costs.
easyMarkets offers fixed spread trading on CFDs, making prices transparent and easy to calculate.