When speaking with those who haven’t tried forex trading before, even if they come from the world of stocks, bonds, or futures , it always reminds me that sometimes even the most basic foundational elements of this global powerhouse of a market have to be explained . So let’s jump right into what the pairings mean, what the main pairings are, and what the cross pairings are .

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. So what does that mean when I see a price quote of 1.3200 on the Eur/Usd ? Here is the easy way you can keep the answer in mind : take the base currency pair , in this case the US Dollar , look at this price quote of 1.3200, and then say , "it will take 1.3200 US Dollars for me to buy 1 Euro ." That is exactly what that price quote means . Maybe you look a few weeks later at the price quote and it’s become 1.4000 this tells you that the US Dollar is now weaker when compared to the Euro since to buy one Euro you now need 1.4000 US dollars . Conversely , if you find the price quote is 1.2500 down the road, then the US dollar has gained strenght since purchasing one Euro will only take you 1.2400 US dollars .

Forex trading can be really tough when for the Usd/Jpy pair you see a price quote that is 100.50. Using the method we discussed, take the Jpy base currency and look at the price quote of 100.50 and to purchase one US dollar this is the amount of Jpy it takes . Pretty easy huh ? You should no longer have problems figuring out the price quote on a pair when you see a quote window or chart screen .

Since you know can read price quotes , what are the main pairs and cross pairs ? The main pairs are the world’s strongest economies agasint the US dollar . Just a few pairs considered main pairs include the Mzd/Usd, Aud/Usd, Usd/Jpy, Gpb/Usd, and more. 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 this brief article will be helpful to you if you’ve been feeling intimidated the forex trading landscape before . It can take a while to get used to it with all of the different currency pairs, time zones, and economies . Once you begin realizing how the pieces all go together it’s not that difficult – and many actually find it exciting and fun !