What Are Currency Pairs? A Beginner’s Guide to Forex Pairings
What exactly a currency pair is (and why it’s not as confusing as it sounds)
A clear, real-world example of how currency pair trading works
The three main types of Forex pairs: Major, Minor, and Exotic
If you're just getting into Forex, you’ll hear the term "currency pair" a lot — and honestly, it’s not as complicated as it sounds.
A currency pair simply shows how much of one currency you need to buy another. It’s always written as two currencies, like this: EUR/USD (Euro against the US Dollar).
The first part (EUR) is the base currency — the one you’re buying or selling.
The second part (USD) is the quote currency — the one you’re using to measure the value of the base.
So, if EUR/USD is 1.10, that means 1 Euro = 1.10 US Dollars.
📌 Quick Example:
Let’s say you think the Euro is going to get stronger against the Dollar.
You’d buy EUR/USD.
If the rate goes from 1.10 to 1.15 and you sell — boom, profit.
If it drops to 1.05 and you sell — ouch, loss.
It’s really just about predicting which currency will go up or down in value compared to another.
Types of Currency Pairs:
Forex pairs are grouped into three main categories:
Major Pairs
These include the world’s most traded currencies — like EUR/USD, USD/JPY, GBP/USD, etc. They’re popular, liquid, and often more stable.
Minor Pairs
These don’t include the US Dollar but still involve strong economies — like EUR/GBP or AUD/JPY.Exotic Pairs
These combine a major currency with one from a smaller or emerging market — like USD/TRY (US Dollar/Turkish Lira). They can be more volatile, so handle with care.
💡 How to Choose the Right Pair as a Beginner
If you're just starting out, stick to major pairs. Here’s why:
They have lower fees (spreads)
There’s more information and news about them
They’re less risky compared to exotic pairs
Most beginners start with pairs like:
EUR/USD
USD/JPY
GBP/USD
Key Terms to Know
Base Currency: The first currency in the pair (e.g., EUR in EUR/USD)
Quote Currency: The second currency in the pair (e.g., USD in EUR/USD)
Bid Price: What the broker will pay you for the pair
Ask Price: What the broker will charge you to buy the pair
Spread: The difference between the bid and ask price (the broker’s fee)
✅ TL;DR (Too Long; Didn’t Read):
Currency pairs = two currencies traded against each other.
You’re either buying or selling the base against the quote.
Major pairs are safest for beginners.
Always check which direction you think the market’s going before you click that buy or sell button.