There are two quote types: direct and indirect. A direct quote is an amount of domestic currency required to buy or sell one unit of the foreign currency. Most currency pairs are direct quotes of the US dollar against currencies of various countries
Example:
USD/RUR – 33.70; it means one US dollar equals 33.70 Russian rubles;
USD/CHF – 1.2350; one US dollar makes up 1.2350 Swiss francs.
An indirect quote is a domestic exchange rate quoted as the foreign currency per unit of the domestic currency. Historically, the British pound, euro, Australian and New Zealand dollars as well as some other currencies have indirect quotes.
Example:
EUR/USD – 1.2570; one euro costs 1.2570 US dollars;
GBP/USD – 1.8420; one pound sterling costs 1.8420 US dollars.
Besides, there are cross pairs excluding the US dollar. For instance: EUR/JPY, GBP/CHF etc.
There are three types of currency pairs:
Majors;
Crosses;
Exotic.
Major currency pairs have high liquidity, they are traded most and by a vast number of players.
The majors include seven pairs which are represented by a quote of the US dollar and a currency of one of the world’s most significant countries. The majors are called so because the currencies they include are considered to be the most stable.
They are:
EUR/USD – euro/US dollar;
GBP/USD – pound/ US dollar;
AUD/USD – Australian dollar/ US dollar;
NZD/USD – New Zealand dollar/ US dollar;
USD/JPY – US dollar/ yen;
USD/CHF – US dollar/ franc;
USD/CAD – US dollar/ Canadian dollar.
Each of these trading instruments has its features. For example, EUR/USD and GBP/USD are well amenable to technical analysis alongside fundamental one. The EUR/USD pair gained its popularity thanks to its activity with relatively smooth fluctuations. It enables traders to reap good profits in intraday and short-term trading. As a rule, EUR/USD and USD/CHF have an opposite correlation, while EUR/ USD and GBP/USD are linked directly. In other words, if an uptrend appears for the euro/dollar pair, the USD/CHF is most likely to go downwards. The connection between currency pairs is well observed on intraday charts. A trader simply needs to study history of an instrument chart. The USD/CHF movement might be forecasted based on the EUR/USD chart. Traders only need to remember that the dollar/franc pair is less stable than the euro/dollar and novices therefore need to be cautious.
Currency pairs which exclude the US dollars are called crosses. They are less active than the majors.
This group includes:
CAD/JPY – Canadian dollar/ Japanese yen
CHF/JPY – Swiss franc/ Japanese yen
EUR/AUD – euro/ Australian dollar
EUR/CAD – euro/ Canadian dollar
EUR/CHF – euro/ Swiss franc
EUR/GBP – euro/ British pound
EUR/JPY – euro/ Japanese yen
EUR/NZD – euro/New Zealand dollar
GBP/AUD – British pound/ Australian dollar
GBP/CHF – British pound/ Swiss franc
GBP/JPY – British pound/ Japanese yen
NZD/JPY – New Zealand dollar/ Japanese yen
Currency pairs including the yen such as AUD/JPY, EUR/JPY, GBP/JPY, and NZD/JPY most suit traders who prefer classical trading.
Example:
USD/RUR – 33.70; it means one US dollar equals 33.70 Russian rubles;
USD/CHF – 1.2350; one US dollar makes up 1.2350 Swiss francs.
An indirect quote is a domestic exchange rate quoted as the foreign currency per unit of the domestic currency. Historically, the British pound, euro, Australian and New Zealand dollars as well as some other currencies have indirect quotes.
Example:
EUR/USD – 1.2570; one euro costs 1.2570 US dollars;
GBP/USD – 1.8420; one pound sterling costs 1.8420 US dollars.
Besides, there are cross pairs excluding the US dollar. For instance: EUR/JPY, GBP/CHF etc.
There are three types of currency pairs:
Majors;
Crosses;
Exotic.
Major currency pairs have high liquidity, they are traded most and by a vast number of players.
The majors include seven pairs which are represented by a quote of the US dollar and a currency of one of the world’s most significant countries. The majors are called so because the currencies they include are considered to be the most stable.
They are:
EUR/USD – euro/US dollar;
GBP/USD – pound/ US dollar;
AUD/USD – Australian dollar/ US dollar;
NZD/USD – New Zealand dollar/ US dollar;
USD/JPY – US dollar/ yen;
USD/CHF – US dollar/ franc;
USD/CAD – US dollar/ Canadian dollar.
Each of these trading instruments has its features. For example, EUR/USD and GBP/USD are well amenable to technical analysis alongside fundamental one. The EUR/USD pair gained its popularity thanks to its activity with relatively smooth fluctuations. It enables traders to reap good profits in intraday and short-term trading. As a rule, EUR/USD and USD/CHF have an opposite correlation, while EUR/ USD and GBP/USD are linked directly. In other words, if an uptrend appears for the euro/dollar pair, the USD/CHF is most likely to go downwards. The connection between currency pairs is well observed on intraday charts. A trader simply needs to study history of an instrument chart. The USD/CHF movement might be forecasted based on the EUR/USD chart. Traders only need to remember that the dollar/franc pair is less stable than the euro/dollar and novices therefore need to be cautious.
Currency pairs which exclude the US dollars are called crosses. They are less active than the majors.
This group includes:
CAD/JPY – Canadian dollar/ Japanese yen
CHF/JPY – Swiss franc/ Japanese yen
EUR/AUD – euro/ Australian dollar
EUR/CAD – euro/ Canadian dollar
EUR/CHF – euro/ Swiss franc
EUR/GBP – euro/ British pound
EUR/JPY – euro/ Japanese yen
EUR/NZD – euro/New Zealand dollar
GBP/AUD – British pound/ Australian dollar
GBP/CHF – British pound/ Swiss franc
GBP/JPY – British pound/ Japanese yen
NZD/JPY – New Zealand dollar/ Japanese yen
Currency pairs including the yen such as AUD/JPY, EUR/JPY, GBP/JPY, and NZD/JPY most suit traders who prefer classical trading.
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