As you already know, the currency pair is a structure of quotes and formation of currencies pricing traded on the Forex market, which consists in the fact that the value of one currency is expressed through another currency. The first currency in a currency pair is called the “base currency”, and the second is called the “quoted currency”. A currency pair shows how much the quoted currency is needed to buy one unit of the base currency.
A huge amount of currency pairs is being traded on the foreign exchange market. All of them can be divided into certain types. Let’s define them.
Main currency pairs
The main currency pairs (majors) are the most popular, liquid and in-demand assets of the financial market. Today, there are only 7 such pairs:
These instruments are very popular around the world. Because of what they are the most liquid instruments in the Forex market. Experienced traders advise starting trading exactly with these currency pairs. They are the best ones for newbies to trade.
Often one has to convert one currency into another, without any bindings to the US dollar. Such Forex currencies are also known as cross rates. This instrument has much less liquidity and is more complicated for novice traders. As a rule, in cross-rates, 7 major currencies are used relative to each other. As an example, the following pairs can be given:
The list of cross rates does not end here since the full list is formed from all major currencies in combination with each other.
These pairs are not so much in demand as the major ones. There is a feature that must be considered when trading cross rates. The most preferred and the best combinations are the tandems with the yen, the euro, the New Zealand dollar, the British pound and the Australian dollar. But for beginners, it is better not to try such combinations. The thing is that it is difficult to predict and analyze them. It is better to practice with more stable pairs at first.
Exotic currency pairs
However, these are not all currencies for trading. There is a huge number of countries around the world that use their own currency. In Forex, such a currency pair is called exotic, for example, CHF/HUF, EUR/PLN, USD/ZAR, etc.
These tools have got such a name due to the fact that they are very rarely used in trading, and also because of very low liquidity and huge distribution. In addition, traders who work with them often have no information to draw up a trading strategy based on exotic currency pairs. If it is enough for those who work with the main assets to keep track of the most important world events, the situation with exotic pairs is much more complicated. It takes a long time to prepare and view a lot of information. Future movements of such pairs are really hard to forecast.
Cryptocurrencies can be traded not only on the stock exchanges but also on the Forex market. Cryptocurrency is digital information, or rather, an information unit, securely encrypted, which cannot be copied. These encrypted blocks are used as a surrogate for cash during transactions over the Internet.
JustForex offers many cryptocurrency pairs for trading. Here are some examples of them:
Trading a cryptocurrency through a Forex broker is much more profitable than buying it by yourself on the stock exchanges and then selling it. A trader can use a leverage and earn more profit at the expense of this than on the stock exchange because in exchange transactions the buyer has to pay the full value of the asset.In addition to all these groups, traders also use some Forex instruments, which are not included in one of the categories mentioned above. The most popular tools among traders are metals, for example, XAU/USD, XAG/USD, as well as these tools (metals) in relation to the euro. All these instruments are very liquid, but they are very difficult to trade, especially for novice traders.