Forex Trading Currency Pairings And What They Mean

When talking to people who have never tried forex day trading system before

, even if they are familiar with th eworld of bonds, futures, or even stocks, it makes me remember that for this global market, even the very basics must 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 ? First we'll look at the Eur/Usd which has the US Dollar as the base currency in the pair against the Euro . So what does that mean when I see a price quote of 1.3200 on the Eur/Usd ? To remember this answer the easy way, do this: you take the base currency pair, the US dollar here, take a look at the 1.3200 price quote , then tell yourself , "it will take 1.3200 US Dollars for me to buy 1 Euro ." 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 because it now takes 1.4000 US Dollars to buy 1 Euro . Of course , if the price quote is 1.2500 a couple of months later , then the US Dollar has become stronger because you'll only need 1.2400 US dollars to purchae a Euro.

Forex day trading system can be especially challenging when you see a price quote of say 100.50 on the Usd/Jpy pair for example . Well, using our method from above , simply take the base currency of Jpy and look at the price quote of 100.50 and that is how many Jpy it will take to buy 1 US Dollar . Pretty easy huh ? You should no longer have problems figuring out the price quote on a pair when looking at a quote window or even a chart screen.

Since you know can read price quotes , what are the main and cross pairs ? Well the main pairs are usually the strongest economies throughout the world 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 which includes the Gbp/Jpy and the Eur/Jpy to name a couple that are popular.

Hopefully this article will be of help to you if you have been intimidated by the forex day trading system landscape in the past . You may need a bit of time to get used to this with the many economies, currency pairs, and different time zones . After you start understanding how everything falls together it's really not that bad - and to many, this is a whole lot of fun!

by: David F. Dacosta

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