Forex (FX) pairs

What is currency trading?

The first currency in a forex pair is known as the base currency. This is the currency that a trader thinks will go up or down against the second currency in the pair. The second currency is known as the quote or counter currency. For example, if you buy the Canadian dollar versus US dollar (CAD/USD), you're anticipating a rise in the Canadian dollar at the expense of the US dollar. Profit and loss is normally expressed in the amount of the secondary currency in forex trading. Learn more in our how to trade forex guide.

Bid-ask currency example

Every currency pair has a bid and an ask price. This is the rate at which you can sell a currency, and the rate at which you can buy a currency. The price maker (usually a broker) gives you a rate at which they are willing to buy or sell a currency pair.

The table below illustrates basic bid and offer prices.

7 major forex pairs

There are many currency pairs for traders to choose from when placing a trade in the forex market. Major pairs are the most widely traded currencies in the foreign exchange market. Here are the 7 major forex pairs that are considered to be the most popular across the world, all of which can be traded on using CFDs:

Major forex pairs

• The US dollar and Canadian dollar: USD/CAD

• The euro and US dollar: EUR/USD

• The US dollar and Japanese yen: USD/JPY

• The British pound sterling and US dollar: GBP/USD

• The US dollar and Swiss franc: USD/CHF

• The Australian dollar and US dollar: AUD/USD

• The New Zealand dollar and US dollar: NZD/USD

The major pairs make up 75% of all forex trades. The majors are the most liquid and widely traded in the forex market. They make up the vast majority of all FX trades. Because these pairs have the largest volume of buyers and sellers, they also typically have the tightest ask (buy) and bid (sell) spreads. The spread is the difference between the buy and the sell price. Most traders would agree that the most profitable forex pairs to trade include the above seven major forex pairs.

What are the most traded currency pairs in forex?

In summary, major forex pairs are the most frequently traded currency pairs within the forex market. If you are interested in opening a live or demo account to trade on the underlying price movements of our currency pairs, read our article with suggestions for the most traded currency pairs​.

Forex pairs with the most pips

The last decimal place to which a particular exchange rate is usually quoted is referred to as a pip (percentage in point). Some online forex providers typically quote no more than a fixed 1-point spread between the bid and offer on major forex pairs, and liquid cross rates in normal market conditions.

In currency trading, traders often look for currency pairs with the highest pip values, as they are very useful for short-term strategies, such as day trading. The value of each pip depends on your lot size and the specific currency that you are trading. Pips can also be useful for calculating the amount of leverage that a trader can use when foreign currency trading.

A pip is typically the fourth digit after the decimal point of the currency pair. So if the euro/dollar pair (EUR/USD) were to move from 1.0630 to 1.0631, that’s a one pip movement. The pip value in forex major pairs determines the amount of profit or loss that a trader will make per trade.

How currency pairs work

Let's use an example of CFD trading to explain how currency pairs can be traded on, using the words buy/sell to represent long and short derivative positions. The euro against the US dollar is a widely traded major forex pair. An example of a currency price is EUR/USD = 1.3560/1.35602 (sell rate/buy rate). In this instance, the euro is the base currency and the US dollar is the quote currency. To buy one unit of the base currency, the trader will have to pay 1.35602 in the quote currency - US dollars in this case. Conversely, if the trader wishes to sell one euro, they would receive 1.3560 US dollars. A trader might buy the EUR/USD pair if they believe the euro will increase in value relative to the dollar. Buying the EUR/USD dollar pair is also referred to as ‘going long’. Alternatively, a trader can sell the EUR/USD pair - known as ‘going short’ - if they believe the value of the euro will go down relative to the dollar.

How to trade on our forex pairs

1. Open an account. When opening a live account, you can deposit funds and start trading CFDs on your chosen currency pair through a standard account or an FX Active account.

2. Choose your currency pair. We offer over 330 currency pairs, including major, minor and exotic crosses, which is the highest forex offering in the industry. We also offer FX forward contracts, which allow traders to buy or sell a currency pair with a pre-agreed price and date of execution.

3. Build a trading strategy. Decide if you want to buy (go long) or sell (go short) based on whether you think that the instrument's price will rise or fall.

4. Keep up to date with the forex market. Make use of our news and analysis section on the platform, which is updated on a daily basis. It is wise to follow the latest news and economic announcements, such as changes to interest and inflation rates. What is forex trading?

5. Manage your risk. Stop-loss orders can help to protect your positions and close you out if the market turns unfavourable.

Live forex currency rates in pairs

The foreign exchange market differs from other financial markets in that it has no physical location or central exchange. The whole market runs electronically, through a network of banks. It also runs continuously for 24 hours a day, five days a week. The forex market is the most popular financial market, traded by individual retail traders, banks and businesses alike. Learn more about how you can take advantage of forex trading hours.

What moves currency pairs?

Exchange rates fluctuate based on which currency is stronger at certain times. Traders seek out the best foreign exchange rate. These rates are supplied by global banks and updated in time periods of less than a second; the forex market is extremely fast-paced.

Correlation in forex currency pairs

A currency pair’s correlation refers to the similarities shared by various pairings. In the forex market, no single currency pair is traded completely independent of the others. An understanding of forex correlation pairs​ is helpful when managing a portfolio. For example, when trading the euro against the Japanese yen (EUR/JPY pair), a trader is effectively trading a derivative of the euro dollar (EUR/USD) and dollar yen (USD/JPY) pairs. Therefore, the EUR/JPY pair must be somehow correlated to one or both of these other currency pairs.

It is useful to get a better understanding of currency correlations and gain an insight into the relationship between currency pairs. Considering whether they are negatively or positively correlated, or if they are likely to move in the same direction, opposite directions, or completely randomly could be useful. These are all things to take into consideration when trading on currency pairs.

What are the benefits of trading major currency pairs?

• All major currency pairs have very liquid markets that trade 24 hours a day, every business day.

• Due to major forex pairs being the most liquid and widely traded in the world, they will likely have tighter spreads. These tighter spreads reduce one’s dealing costs, and therefore increase the margin for profit.

• Trading hard currencies mean that it is less likely to depreciate suddenly or fluctuate much in value. It is a stable currency that is widely accepted and typically liquid in the forex market.

• Central banks tend to raise interest rates when the economy is growing, and cut them to stimulate a struggling economy. These interest rates govern the forex market. This is because a currency’s interest rate is such a big factor in determining its perceived value.

How to trade forex starting with one pair

Forex trading offers frequent trading opportunities, as currency prices are constantly fluctuating in value against each other. FX trading allows traders to speculate on all the major currency pairs. The only limit to which currency pairs can be traded are the pairs and quantity offered by the trading platform individual traders choose.

The three main types of currency pairs are majors, minors (crosses) and exotics. The major currency pairs are often the most popular to trade, as they are the most liquid. That is to say these pairs have the highest trading volume. Minor currency pairs are ones which leave out the United States dollar, and they are normally less liquid. Examples include the euro and Swiss franc (EUR/CHF), Canadian dollar and Japanese yen (CAD/JPY), or pound sterling and Australian dollar (GBP/AUD). Cross pairs can provide trading opportunities when the majors are presenting less favourable conditions. There are also exotic currency pairs. These are the least traded in the forex market, and are less liquid than the cross pairs. Prices can fluctuate greatly, and due to the lower volume of trades, spreads can be wide. There also tends to be less historical data on these pairs, so those relying on technical analysis may find information harder to come by.

• Open a live account to start trading CFDs on 330+ currency pairs now.

• Open a demo account to trade risk-free with $10,000 worth of virtual funds.