The Rant
the forex market
Submitted by Maddison » Mon 20-Sep-2021, 23:29Subject Area: General | 3 member ratings |
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Trading in the forex market involves the simultaneous buying of one currency and the selling of another. All currency trades involve a currency pair and when taking a forex position, you simultaneously go long 1 currency and short another.
The base currency is the 1st currency in a currency pair, while the 2nd currency is the quote or counter currency. The exchange rate of the currency pair is the amount of quote currency needed to buy one unit of the base currency.
The most active currency pairs have the U.S. dollar as a component and are known as the majors. They are:
EUR/USD: The EU euro versus the U.S. dollar.
USD/JPY: The U.S. dollar versus the Japanese yen.
GBP/USD: The UK pound sterling versus the U.S. dollar.
USD/CHF: The U.S. dollar versus the Swiss franc.
AUD/USD: The Australian dollar versus the U.S. dollar.
USD/CAD: The U.S. dollar versus the Canadian dollar.
NZD/USD: The New Zealand dollar versus the U.S. dollar
Currency pairs that do not include the U.S. dollar are known as crosses, and they often have considerably less liquid markets than the majors. Other less liquid pairs that do include the U.S. dollar consist of the minor and exotic currency pairs.
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