What Are Currency Pairs in Forex Market?
Currency pairs refer to the national currencies of two countries combined to trade on the Forex market. Both the currencies have different exchange rates at which the trade will have a position basis. Each trading in the Fx market, whether buying or selling, will occur through the currency pairs.
If you’re a new Forex trader or investor, you may get confused and overwhelmed by various currencies available to trade. You may wish to learn the basics of currency pairs trading. You may think which is the best and the most popular currency pairs to trade? To answer this, you will have to take your time to evaluate different currency pairs against your trading strategy. Forex trading is about purchasing and selling currency pairs.
Which Are the Most Popular Currency Pairs in the Forex Market?
The strongest and the most dominant currency is the USD ( US Dollar). It is traded most widely because of the large size of the economy of the United States. The most popular currency pairs are known as majors. They are the most liquid currency pairs.
The value of majors keeps fluctuating as trade volumes of the referred countries change each minute. The major pairs are associated with countries having the maximum financial power. Their countries conduct a large number of trades globally. Usually, these pairs are highly volatile. So, the price fluctuations are generally the largest. Below is the list of most popular currency pairs in the Forex market:
- EUR/USD
- GBP/USD
- USD/JPY
- USD/CAD
- USD/CHF
- AUD/USD
- USD/KRW
- USD/HKD
- USD/CNY
Which Forex Pairs Pay the Most?
With more than 200 nations worldwide, it is simple for you to figure out the most appropriate currency pair while trading Forex. However, the currency pair may not offer the best outcomes to every currency trader. This situation has left most traders asking – which forex pairs pay the most in the Forex market. Firstly, let us identify the most popular currencies that are there in the Forex world. These include:
- US Dollar (USD)
- British Pound (GBP)
- Zealand Dollar (NZD)
- Japanese Yen (JPY)
- Euro (EUR)
- Swiss Franc (CHF)
With these above currencies, you may find many currency pairs in the Forex market to trade. To become successful, you should gain a complete understanding of the different currency pairs. Based on popularity ad historical performance, below is the list of currency pairs that pay the most:
- USD/EUR
- USD/CAD
- USD/JPY
- GBP/USD
- USD/CHF
- AUD/USD
Whether these currency pairs pay the most to you or not also depends on your trading preference and strategy. It is up to you to determine which trading strategy fits your trading and which currency pair is well-suited to your trading strategy for making the maximum profits. Always choose one currency pair at once to learn and research about it before trying your hand at various currency pairs.
What Is Base and Quote Currency in the Forex Market?
As we already know, currency pairs are quoted as pairs of different currencies. In a currency pair, the base currency is the first mentioned currency. And the second currency in a currency pair is the quote currency. It is also known as Counter currency. For example, in the currency pair, EUR/USD, EUR is the base currency, and USD is the quote currency.
What Is the Bid Price and Ask Price?
In the Forex market, currency pairs will quote two prices always. One is the bid price, and the other is the ask price. Bid and ask prices are the potential price that sellers and buyers are ready to transact. The bid price is the rate at which traders can sell a currency. The ask price is the rate at which traders can buy a currency.
How to Read Currency Pairs?
A currency pair includes the base currency and the quote currency. The currency pairs refer to the currencies you are trading. The first element in the currency pair is the base currency. The second element is the quote currency. The most popular and frequently used base currencies are GBP, EUR, USD, and AUD. The quote currencies can be any currency. It can be another common base currency as well. For example:
EUR/USD is equal to 1.3500
In this example, EUR is a base currency, and the quote currency is USD. This means one Euro has a value of 1.35 US Dollars.
Regardless of which currency is taken as a base currency, its value is equal to 1 always.
In the Forex market, a base currency signifies how much of a quote currency is required to get a unit of a base currency.
How Many Currency Pairs Exist in the Forex Market?
Nearly 180 currencies are circulating legally all through the world. Therefore, it is possible to exchange one currency with 179 currencies. Most of the international forex brokers, like forex brokers Australia or best forex brokers UK, offer you 40 to 70 currency pairs to trade.
Conclusion
The best currency pair to trade in the Forex market is the one you are fully knowledgeable about. The Forex trading dynamics and basics is a remarkable subject to study. Ensure to study the Forex market in detail before you start making investments. Since trading in the Forex market is risky, try it with a Demo account initially using virtual currencies to practice before you risk your capital. Therefore, you must go through AvaTrade Review to understand this trading platform in detail, as it also provides a demo account so that you can utilize your strategies on it without any loss.
