The Basics Of Trading

Foreign exchange prices are normally derived on quotes up to the currencies four decimal places or 0.0001, known as the pip. There are exceptions in quoting the pip and to determine this requires knowing the currency pairs.

There are major currencies often traded in the foreign exchange market. These are the US Dollar (USD), Euro (EUR), Japanese Yen (JPY), British Pound (GBP), Swiss Franc (CHF), Canadian Dollar (CAD), and Australian Dollar (AUD).

These currencies are often traded in pairs, which is more often done with the Dollar and Euro and at time with the British Pound. A sample currency pair would be the Euro and the US Dollar, traded as the Euro, or known under the forex symbol EURO/USD. To wit, here are the major currency pairs: EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD, AUD/USD, EUR/GBP, EUR/JPY, EUR/CHF, and GBP/JPY.

With knowledge on the major currency pairs, trading would be a little less confusing for the beginner. One would also know that the pip when quoting for USD/JPY is equal to 0.01 only. This would result to a higher conversion and trading price compared to a pip using 0.0001.

Source: Forex Basics, fxsol.com and Forex Trading, fxsol.com