Mechanics
Currency pair
Two currencies quoted against each other as a single tradeable instrument.
Every forex trade is an exchange of one currency for another, so instruments are quoted in pairs: EUR/USD, GBP/JPY, AUD/NZD. Buying the pair means going long the base currency and simultaneously short the quote currency.
Pairs are grouped into majors (containing the US dollar and a large economy), crosses (no dollar, such as EUR/GBP) and exotics (a major against a smaller or less liquid currency). Liquidity, spread and typical volatility differ sharply between the groups.
Taught in these lessons
- What is a pip? — Forex Foundations
- Lots & leverage — Forex Foundations
- The bid, the ask & the spread — Forex Foundations
- Choosing a timeframe — Charts & Execution
- Trend and structure — Charts & Execution
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