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Currency Pairs

Lesson 2: Majors, Currency Pairs and Base Currency

Majors

Most commonly traded currencies are referred to as MAJORS. Below is the list of currency abbreviations which we recommend to memorize.

Majors

Abbreviation ( ISO code)

US Dollar

USD

Japanese Yen

JPY

Euro

EUR

British Pound

GBP

Canadian Dollar

CAD

Australian Dollar

AUD

Swiss Franc

CHF

Currency Pair

As a foreign currency trader you have to know the abbreviations of the commonly traded currencies (the Majors). Since you trade one currency for another, the currencies you chose to do business with will be shown in pairs.  For example:

Currency Pair

Meaning

USD/JPY

US Dollar vs the Japanese Yen

EUR/USD

Euro vs US Dollar

USD/CHF

US Dollar vs Swiss franc

GBP/USD

British Pound vs US Dollar

Base and Counter/Quote Currencies

The first currency in a currency pair (the one on the left side from the slash "/ ") is called base currency. Base currency always has a value of 1. The second currency in the currency pair (the one on the right side from the slash "/") is called counter currency or quote currency.

For example: EUR/USD  

EUR – base currency with value of 1.

USD – quote (or counter) currency

Think of the base currency as the “root”. When you buy, for example EUR/USD, it means that you are buying the base currency (EUR) and simultaneously selling the quote currency (USD).