Find Out The Meaning Of Forex Trading Currency Pairings

When talking to people who have never tried forex trading before

, even if they are familiar with th eworld of bonds, futures, or even stocks, I'm reminded that even the basics of this global market need to be explained . Let's get started looking at pairings and everything having to do with them in the forex market.

What exactly is a currency pair ? We'll begin with the Eur/Usd which has against the Euro, the US dollar as the bas currency within this pair. What is the meaning of the pari when I have a price quote that is 1.3200 on the Eur/Usd? Here is the easy way you can keep the answer in mind : take your currency pair base , in this case the US Dollar , look at this price quote of 1.3200, then tell yourself , " to buy 1 Euro it will take me 1.3200 US dollars ." This is what that price quote really means. Perhaps a few months later you check out the price quote and it is suddenly 1.4000 this means that against the Euro the US dollar has become weaker since to buy one Euro you now need 1.4000 US dollars . Conversely , if the price quote is 1.2500 a couple of months later , then the US dollar is getting stronger because now it will only take 1.2400 US Dollars to buy 1 Euro .

Forex trading can be really tough when for the Usd/Jpy pair you see a price quote that is 100.50. Well, using our method from above , take the Jpy base currency and look at the 100.50 price quote and this is the amount of Jpy it takes to purchase one US dollar. Pretty easy huh ? Now you will have no difficulty understanding the price quote on any pair when you see a quote window or chart screen .

Now that we know how to read the price quotes , what are the main pairs and cross pairs ? You'll find the main pairs happen to be the strongest world economies paired versus the US dollar. A few of these pairs are Eur/Usd, Gbp/Usd, Aud/Usd, Usd/Cad, Usd/Jpy, and Nzd/Usd . Cross pairs do not involve the US dollar such as Eur/Jpy, Gbp/Jpy or Eur/Gbp to name a few of the more popular ones .

Hopefully you'll be helped by this article if you find you're intimidated by the forex trading landscape before . You may need a bit of time to get used to this with all the time zones, economies, and currency pairs out there. Once you begin realizing how the pieces all go together it's really not that bad - and many actually find it exciting and fun !

Find Out The Meaning Of Forex Trading Currency Pairings

By: David F. Dacosta

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