By now you know what a PIP is and are also quite good at working out how to calculate PIP values (or at least, have found a good online calculator to use). In today’s lesson we learn about what the main currency pairs used in Forex Trading are.
Although there are a number of different currencies in the world, the world of Forex trading is based on the 8 most traded currencies. These are :
- the U.S. dollar (USD)
- the Canadian dollar (CAD)
- the euro (EUR)
- the British pound (GBP)
- the Swiss franc (CHF)
- the New Zealand dollar (NZD)
- the Australian dollar (AUD)
- and the Japanese yen (JPY).
Currencies are always traded in pairs for obvious reasons – to sell a currency you must buy it with another currency. Although there would potential to have 27 currency pairs based on the currencies above, this can actually be shrunk down to 18 currency pairs – these being the most liquid (i.e. most easily traded) currency pairs.
These are:
USD/CAD - EUR/JPY - EUR/USD
EUR/CHF - USD/CHF - EUR/GBP
GBP/USD - AUD/CAD - NZD/USD
GBP/CHF - AUD/USD - GBP/JPY
USD/JPY - CHF/JPY - EUR/CAD
AUD/JPY - EUR/AUD - AUD/NZD
These 18 pairs represent the large majority of all currency trades done in the forex trading market. If you are wanting to make money out of Forex Trading you will without a doubt be focusing on one or more of these currency pairs.
If you’re looking at Forex Trading Software, you might be interested to know what currency each software system trades in. For the products I recommend these are the currency pairs traded :
- Forex Tracer – EUR/USD
- Forex Funnel – USD/JPY
- Forex Brotherhood - free to choose from the major currency pairs
Today’s lesson has been simple, but hopefully you’ve learned something you didn’t know yesterday.
Happy trading.
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