Work on the foreign exchange market embraces purchase of one currency and sale of another. Forex market is the largest financial market worldwide; its daily turnover exceeds one of the stock market by many times. People trade on Forex 24 hours a day 5 days a week.
All trading operations are carried out with the foreign currency. Currencies of different countries are traded on the market. The list of currencies contains the monetary units of most countries, which currency is convertible, i.e. can be exchanged for the monetary unit of another country.
All the currencies on Forex are combined in pairs, because the rate of one currency is set against the rate of another. The international organization for standardization (ISO) assigned abbreviation to all pairs. It made trading convenient because traders should know which currency pairs are hidden behind the name of quotation.
There are basic and quoted currencies in the pair. As a rule, basic currency is the US dollar. Most currency operations are executed with four main currencies: the euro EUR, the Swiss franc CHF, the British pound sterling GBP and the Japanese yen JPY.
Examples of the currency pairs:
GBP / USDBritish pound / US dollar- “Cable”
EUR / USD Euro / US dollar - “Euro”
USD / JPY US dollar / Japanese yen “Ninja”
USD / CHF US dollar / Swiss franc “Swiss dollar”, or “Swissy”
USD / CAD US dollar / Canadian dollar “Loonie”
AUD / USD Australian dollar / US dollar “Aussie”
EUR / GBP Euro / British pound “Chunnel”
EUR / JPY Euro / Japanese yen “Yuppy” EUR / CHF Euro / Swiss franc “euro-franc”
GBP / CHF British pound / Swiss franc “sterling-franc”
GBP / JPY British pound / Japanese yen “Geppie” or “sterling-yen”
CHF / JPY Swiss franc / Japanese yen NZD / USD New Zealand dollar / US dollar “New Zealand dollar” or “Qiwi” USD / ZAR US dollar / South African rand or “South African rand”
ООВ/ USDSpot Gold SLV / USD Spot Silver Moreover, there is a division of the currency pairs.
The commonly used one is Major group – 75%% of all trading operations on the market are settled with MAJOR pairs:
EUR/USD, GBP/USD, USD/CHF, USD/JPY. Currency pairs which do not involve the US dollar are called cross-rates. They are: EUR/CHF, EUR/GBP,EUR/JPY, GBP/JPY, AUD/JPY, NZD/JPY.
Every currency pair has its peculiarities and is influenced by different factors. The most important condition of successful trading on Forex is understanding of this fact by a trader.