What are Currency Pairs?

A Currency Pair is the quotation and pricing structure of the currencies traded in the Forex market; the value of a currency is a rate and is determined by its comparison to another currency. The first listed currency pair is called the base currency, and the second is called the quote currency. The currency pair indicates how much of the quote currency is needed to purchase one unit of the base currency.


There are different types of currency pairs: 


1. Major Currency Pairs: all contain the US Dollar ($) on one side- either on the base side or quote side. They are the most frequently traded pairs in the Forex market. The Majors generally have the lowest spread and are the most liquid. 


2. Minor Currency Pairs: do not contain the US Dollar ($) are also known as cross-country pairs or simply "crosses". The most active crosses are derived from the three major Non-US Dollar currencies (Euro, Pound, Yen). 


3. Exotic Currency Pairs: are made up of a major currency pair with the currency of an emerging or a strong but smaller economy from a global perspective, such as, Hong Kong, Singapore or European countries outside of the Euro zone. These pairs are not traded as often as the majors or minors, so often the cost of trading these pairs can be higher than the majors or minors due to lack of liquidity in these markers. 


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