Currency Pairs: Learn How Currencies Function in Forex | FP Markets скачать в хорошем качестве

Currency Pairs: Learn How Currencies Function in Forex | FP Markets

The Forex market—or FX market—operates by way of currency pairs. Think of it as comparing the value of one currency against that of another in the form of a quotation. In each currency pair, regardless of the currencies involved, there is a base currency and a quote currency or sometimes referred to as a secondary or counter currency. The base currency is always on the left-hand side of the quotation, while the quote currency is on the right side. It is important to understand that the base currency always represents one unit of currency, while the quote currency represents the amount required to purchase one unit of the base currency. Imagine EUR/USD trades at $1.2000. This means to purchase 1 euro, it will cost $1.20. The base currency, in this case, is 1 euro and the quote currency is $1.20. When entering long a currency pair, you essentially buy the base currency and sell the quote currency. Conversely, when selling a currency pair, you effectively sell the base currency and buy the quote. Ultimately, currency pairs are organised into three groups: Majors, Minors, and Exotics. Major currency pairs are those that contain the most heavily traded currencies; so, think EUR/USD, GBP/USD, and USD/JPY. In addition, the ‘majors’ always contain the US dollar. Minor currency pairs, or sometimes referred to as ‘cross-currency pairs’, are those not associated with the US dollar. Popular ‘minors’ are the GBP/JPY, EUR/GBP, AUD/JPY, and EUR/AUD. Exotic currency pairs, on the other hand, include a major currency that is paired alongside currencies that can be relatively thin markets. Exotic currencies are those typically associated with developing or emerging countries. Common ‘exotics’ are the Japanese yen against the Norwegian krone and the New Zealand dollar against the Singaporean dollar. So which pairs should you trade? Aside from trading experience and the trading style employed, volatility, as well as liquidity, is likely to be a deciding factor. Of course, you will also need to take into account the time of day. A currency pair tends to work with increased liquidity when its financial centre is active. For example, GBP-based currency pairs are usually most active during the London session. Aaron Hill was introduced to financial trading, specifically foreign exchange, over a decade ago. Since then, Aaron caught the trading bug and has amassed substantial knowledge, obtaining CMT (Chartered Market Technician) levels 1 & 2. He has since been awarded the CFTe (Certified Financial Technician) and member of the CMT Association! For FP Markets Webinars: https://www.fpmarkets.com/past-webinars/ #FPMarkets #education #knowledge #trading #investment #academy Facebook:   / firstprudentialmarkets   Twitter:   / fp_markets   LinkedIn:   / admin   Telegram: https://t.me/fpmarketsroom