Understanding Currency Pairs

How are Currencies Priced?

When the price of a currency is quoted, it is quoted in terms of a pair with another currency.

All forex is quoted in terms of one currency versus another.

The Best Forex Brokers + Trading Platforms

Broker	Our Rating	Description	Minimum Deposit	Regulation	Visit
XM Group	5	Free forex signals + market research Online education and webinars Fee free withdrawals and deposits	$5	CySEC, FCA, ASIC	Visit Broker XM Group ReviewROTW	Risk Warning: Your capital may be at risk
FBS Markets.	5	Split second execution No requotes Range of accounts	$5	IFSC	Visit Broker FBS Markets. ReviewROTW	Risk Warning: Your capital may be at risk
Plus500	5	No commissions and low spreads Advanced trading tools Minimal account fees	€100	FCA, CySec :	Visit Broker Plus500 ReviewT1 ROTW	Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
AVATrade	5	Trusted, regulated broker with 10 yrs experience Multi award winning company Segregated accounts with leading banks	$100	Central Bank of	Visit Broker AVATrade ReviewT1 ROTW	Risk Warning: Your capital may be at risk
IQOption	4.5	Stylish & Powerful Platform Trade Bitcoin + 12 Other Top Cryptocurrencies Plus Forex, Options, Stocks & ETF Trading	$10	CySec	Visit Broker IQOption Review	Risk Warning: Your capital may be at risk
HF Markets Ltd. (HotForex)	4.5	8 Trading Platforms Spreads from 0.1 Pips $0 fees on deposits	$5	FSC & CySEC	Visit Broker HF Markets Ltd. (HotForex) ReviewROTW	Risk Warning: Your capital may be at risk
Easy Markets	4.5	Free Guaranteed Stop Loss Segregated funds at top tier banks Fixed spreads & negative balance protection	$100	ASIC, CySEC	Visit Broker Easy Markets ReviewT1 ROTW	Risk Warning: Your capital may be at risk
Markets.com	4	Tight spreads without commissions Advanced charting tools	$100	CySec	Visit Broker Markets.com ReviewT1 ROTW	Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
eToro	4	The leading Social Trading platform with 4.5m traders Follow other traders or be a leader Personal service and VIP perks	$200	FCA, CySec, ASIC	Visit Broker eToro Review	Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
ETX Capital	4	Choice of two professional trading platforms – TraderPro and MT4 Free trading course for deposits over £1,000 Choice of Forex, CFDs, Spread Betting and Cryptocurrencies	€100	FCA	Visit Broker ETX Capital ReviewT1	Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
InstaForex	3.5	'Asia's top broker' Wide choice of leverage options	$1	RAFMM, The Federal	Visit Broker InstaForex ReviewROTW	Risk Warning: Your capital may be at risk
EXNESS (NZ) Ltd.	3.5	Instant fund withdrawals - no commissions Tight spreads from 0.1 points Unlimited leverage	-	FDR (NZ), CySEC	Visit Broker EXNESS (NZ) Ltd. ReviewT1 ROTW	Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74-89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
FXPrimus	3	Trusted by 100,000s of traders Fully licensed in the EU by CySec Tight spreads and fast withdrawals	$100	FSC Mauritius	Visit Broker FXPrimus ReviewROTW	Risk Warning: Your capital may be at risk
OLYMP TRADE	2		10		Visit Broker OLYMP TRADE Review	Risk Warning: Your capital may be at risk

Broker rankings last updated 18/05/2019 04:21

The base currency is the currency on the left of the currency pair and the counter currency is on the right.

This is critical, because no currency has any kind of “absolute” value if it is trade on the international Forex market.

Nothing is pegged to gold, or to some other fixed determination of worth. Every currency on the market “floats” with respect to all the others.

So, for example, in GBP/USD, GBP is the ‘base’ currency and USD the ‘counter’ currency.

Forex price movements are triggered by currencies either:

• appreciating in value (strengthening), or

• depreciating in value (weakening).

If the price of GBP/USD for example were to fall, this would indicate that the counter currency (US dollars) was appreciating, whilst the base currency (British pounds) was depreciating.

Types of Currency Pairs

The most traded currency pairs in the world are called the Majors. They are:

• EUR/USD

• USD/JPY

• GBP/USD

• AUD/USD

• USD/CHF, and

• USD/CAD.

These are by far the most liquid currency pairs, and they account for about 85 per cent of all forex trading.

The pair USD-EUR is not traded for historical reasons. Some pairs have nicknames, which are useful to learn for understanding trading discussion.

Nicknames for Forex Pairs

The GBP/USD pairing is known by traders as ‘the cable’ – at one time an undersea cable connected the trading floors in London and New York to synchronise trading in this currency pair. 

Origins of some other nicknames for pairs are more obscure, but the:

• EUR/USD is sometimes called ‘the Chunnel’,

• EUR/GBP is occasionally referred to as the ‘Loonie’, and

• USD/CAD is (rarely) referred to as the ‘The Funds’.