Trading of Forex is buying of one currency and selling of another currency. Currencies are traded through a broker or dealer and are always traded in pairs.
For example, the Euro and the US Dollar (EUR/USD) or the British Pound and the Japanese Yen (GBP/JPY). When you trade in the forex market, you buy or sell in currency pairs.
Exchange rates fluctuate based on which currency is stronger at the moment.
Major Currency Pairs
The currency pairs listed below are considered the “majors.” These pairs all contain the U.S. dollar (USD) on one side and are the most frequently traded. The majors are the most liquid and widely traded currency pairs in the world.
| CURRENCY PAIR | COUNTRIES | FX GEEK SPEAK |
|---|---|---|
| EUR/USD | Eurozone / United States | “euro dollar” |
| USD/JPY | United States / Japan | “dollar yen” |
| GBP/USD | United Kingdom / United States | “pound dollar” |
| USD/CHF | United States/ Switzerland | “dollar swissy” |
| USD/CAD | United States / Canada | “dollar loonie” |
| AUD/USD | Australia / United States | “aussie dollar” |
| NZD/USD | New Zealand / United States | “kiwi dollar” |
Major Cross-Currency Pairs or Minor Currency Pairs
Currency pairs that don’t contain the U.S. dollar (USD) are known as cross-currency pairs or simply as the “crosses.” Major crosses are also known as “minors.” The most actively traded crosses are derived from the three major non-USD currencies: EUR, JPY, and GBP.
Euro Crosses
| CURRENCY PAIR | COUNTRIES | FX GEEK SPEAK |
|---|---|---|
| EUR/CHF | Eurozone / Switzerland | “euro swissy” |
| EUR/GBP | Eurozone / United Kingdom | “euro pound” |
| EUR/CAD | Eurozone / Canada | “euro loonie” |
| EUR/AUD | Eurozone / Australia | “euro aussie” |
| EUR/NZD | Eurozone / New Zealand | “euro kiwi” |
| EUR/SEK | Eurozone / Sweden | “euro stockie” |
| EUR/NOK | Eurozone / Norway | “euro nockie” |
Yen Crosses
| CURRENCY PAIR | COUNTRIES | FX GEEK SPEAK |
|---|---|---|
| EUR/JPY | Eurozone / Japan | “euro yen” or “yuppy” |
| GBP/JPY | United Kingdom / Japan | “pound yen” or “guppy” |
| CHF/JPY | Switzerland / Japan | “swissy yen” |
| CAD/JPY | Canada / Japan | “loonie yen” |
| AUD/JPY | Australia / Japan | “aussie yen” |
| NZD/JPY | New Zealand / Japan | “kiwi yen” |
Pound Crosses
| PAIR | COUNTRIES | FX GEEK SPEAK |
|---|---|---|
| GBP/CHF | United Kingdom / Switzerland | “pound swissy” |
| GBP/AUD | United Kingdom / Australia | “pound aussie” |
| GBP/CAD | United Kingdom / Canada | “pound loonie” |
| GBP/NZD | United Kingdom / New Zealand | “pound kiwi” |
Other Crosses
| PAIR | COUNTRIES | FX GEEK SPEAK |
|---|---|---|
| AUD/CHF | Australia / Switzerland | “aussie swissy” |
| AUD/CAD | Australia / Canada | “aussie loonie” |
| AUD/NZD | Australia / New Zealand | “aussie kiwi” |
| CAD/CHF | Canada / Switzerland | “loonie swissy” |
| NZD/CHF | New Zealand / Switzerland | “kiwi swissy” |
| NZD/CAD | New Zealand / Canada | “kiwi loonie” |
Exotic Currency Pairs
Exotic currency pairs are made up of one major currency paired with the currency of an emerging economy, such as Brazil, Mexico, Chile, Turkey, or Hungary. The chart below contains a few examples of exotic currency pairs. Wanna take a shot at guessing what those other currency symbols stand for? Depending on your FOREX broker, you may see the following exotic currency pairs so it’s good to know what they are. Keep in mind that these pairs aren’t as heavily traded as the “majors” or “crosses,” so the transaction costs associated with trading these pairs are usually bigger.
| CURRENCY PAIR | COUNTRIES | FX GEEK SPEAK |
|---|---|---|
| USD/BRL | United States / Brazil | “dollar real” |
| USD/HKD | United States / Hong Kong | |
| USD/SAR | United States / Saudi Arabia | “dollar riyal” |
| USD/SGD | United States / Singapore | |
| USD/ZAR | United States / South Africa | “dollar rand” |
| USD/THB | United States / Thailand | “dollar baht” |
| USD/MXN | United States / Mexico | “dollar mex” |
| USD/DKK | United States / Denmark | “dollar krone” |
| USD/SEK | United States / Sweden | “dollar stockie” |
| USD/NOK | United States / Norway | “dollar nockie” |
| USD/RUB | United States / Russia | “dollar ruble” or “Barney” |
| USD/PLN | United States / Poland | “dollar zloty” |
| USD/CLP | United States/ Chile |
It’s not unusual to see spreads that are two or three times bigger than that of EUR/USD or USD/JPY. So if you want to trade exotics currency pairs, remember to factor this in your decision.
G10 Currencies
The G10 currencies are ten of the most heavily traded currencies in the world, which are also ten of the world’s most liquid currencies. Traders regularly buy and sell them in an open market with minimal impact on their own international exchange rates.
| COUNTRY | CURRENCY NAME | CURRENCY CODE |
|---|---|---|
| United States | dollar | USD |
| European Union | euro | EUR |
| United Kingdom | pound | GBP |
| Japan | yen | JPY |
| Australia | dollar | AUD |
| New Zealand | dollar | NZD |
| Canada | dollar | CAD |
| Switzerland | franc | CHF |
| Norway | krone | NOK |
| Sweden | krona | SEK |
| Denmark | krone | DKK |
The Scandies
Scandinavia is a subregion in Northern Europe, with strong historical, cultural, and linguistic ties. The term “Scandinavia” in local usage covers the three kingdoms of Denmark, Norway, and Sweden. Together, their currencies are known as the “Scandies“.
Back in the day, Denmark and Sweden established the Scandinavian Monetary Union to merge their currencies to a gold standard. Norway joined later.
This meant that these countries now had one currency, with the same monetary value, with the exception that each of these countries minted their own coins.
But then World War I happened, and the gold standard was abandoned and the Scandinavian Monetary Union disbanded. These countries decided to keep the currency, even if the values were separate from one another. And this remains the state of things.
If you notice their currency names, they all look similar. That’s because the word “krone or krona” literally means “crown”, and the differences in spelling of the name represent the differences between the North Germanic languages.
| COUNTRY | CURRENCY NAME | CURRENCY CODE |
|---|---|---|
| Denmark | krone | DKK |
| Sweden | krona | SEK |
| Norway | krone | NOK |
CEE Currencies
“CEE” stands for Central and Eastern Europe.
Central and Eastern Europe is a term encompassing the countries in Central Europe, the Baltics, Eastern Europe, and Southeast Europe (the Balkans), usually meaning former communist states from the Eastern Bloc (Warsaw Pact) in Europe.
Central and Eastern European Countries (CEECs) is an OECD term for the group of countries comprising Albania, Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, the Slovak Republic, Slovenia, and the three Baltic States: Estonia, Latvia, and Lithuania.
Regarding the FX market, there are four main CEE currencies to be aware of.
| COUNTRY | CURRENCY NAME | CURRENCY CODE |
|---|---|---|
| Hungary | forint | HUF |
| Czech Republic | koruna | CZK |
| Poland | zloty | PLN |
| Romania | leu | RON |
BRIICS
BRIICS is the acronym coined for the association of five major emerging national economies: Brazil, Russia, India, Indonesia, China, and South Africa.
Originally the first four were grouped as “BRIC” (or “the BRICs”). BRICs was a term created by Goldman Sachs to name today’s new high-growth emerging economies.
BRIICS is the term created by the OECD, when it added Indonesia and South Africa.
| COUNTRY | CURRENCY NAME | CURRENCY CODE |
|---|---|---|
| Brazil | real | BRL |
| Russia | ruble | RUB |
| India | rupee | INR |
| Indonesia | rupiah | IDR |
| China | yuan | CNY |
| South Africa | rand | ZAR |