CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
About Our Global Companies
Valutrades_LogoSpot
Valutrades_SYLogoSpot

Company

Valutrades Limited - a company incorporated in England with company number 07939901. View more information here.
Valutrades (Seychelles) Limited - a company incorporated in the Seychelles with company number 8423648-1.

Regulation

Regulated by the FCA (Fincancial Conduct Authority). Financial Services Register Number 586541.
Regulated by the FSA (Financial Services Authority). Regulatory Number SD028.

Max Leverage

30:1 (or up to 500:1 for Professional clients, click here to find out more about professional client status)
Up to 500:1

Country

United Kingdom
Seychelles

Negative Balance Protection

Yes
Yes
Person working on a tablet

Download a PDF version of this guide by filling out this form, or keep scrolling to read.

Master Guide to Currency Pair Ebook Cover
Down arrow
intro-hero

1

Introduction

Chapter 1 - Understanding Currency Pairs

1

Understanding Currency Pairs

What are currency pairs?

A currency pair quotes two national currencies against one another for trade in the foreign exchange market. Each listed currency has its own exchange rate—the first currency is called the base currency, while the second is known as the quote currency.

How do currency pairs work?

A currency pair describes how much of the quoted currency is required to buy a single unit of the base currency. All currencies are listed using a three-letter International Organization for Standardization  (ISO) currency code, such as EUR (euro) or USD (U.S. dollars). 

Forex trading involves trading currencies in pairs against one another. That means investors and traders must always trade two currencies simultaneously as a pair. 

The foreign exchange market operates using currency pairs. When carrying out a forex trade or transaction, market participants are required to make purchases using one currency and sell in another.

Pairs can only be purchased (going "long") or sold (going "short") as a single unit. The action taken (buying or selling) is directly applied to the base currency, while the opposite action is applied to the Countercurrency. For example, if you Trade Long (BUY) EUR/USD you are Buying EUR and Selling USD.

Chapter 2 - Major Currency Pairs

2

Major Currency Pairs

What affects the rates of major currency pairs?

The rates of major currency pairs can be impacted by numerous factors across the globe, including inflation, war, socioeconomic events, political events, government debt, recessions, interest rates set forth by the central banks of certain countries (such as the Federal Reserve in the U.S.), speculation, and more.

 

What are the benefits of trading major currency pairs?

There are seven major currency pairs in the forex market. These pairs typically have liquid markets that are accessible to traders 24 hours a day during the business week. Because these pairs are the most commonly traded across the globe, they typically have tighter spreads—which can lead to higher profit margins.

The Euro and U.S. dollar, or EUR/USD, is the most popular currency pair in the forex market. Because it’s traded so frequently, it's considered the most liquid pair in the world. 

The major currency pairs are: 

  • EUR/USD
  • USD/JPY
  • GBP/USD
  • USD/CHF
  • AUD/USD
  • USD/CAD
  • NZD/USD

 

Examples of major currency pairs

The seven major currency pairs play a significant role in the global forex market and are the most highly traded. 

 

GBP/USD

As the third most popular trading pair, the British pound and U.S. dollar pair represents the cost of a single British pound in U.S. dollars. The GBP/USD is responsible for around 11% of the overall forex market and is impacted by central banking activity in the U.S. and United Kingdom. 

 

EUR/USD

The EUR/USD pair represents the cost of a single euro in U.S. dollars. Because the European Union euro and the American dollar represent two major global economies, this pair is often preferred among traders. Inflation, recession, war, and other economic factors can impact the EUR/USD exchange rate. 

 

USD/JPY

The USD/JPY pair is the number of Japanese yen equal to the value of a single U.S. dollar. Because the U.S. is the largest economy in the world and Japan is the third largest, this pair is one of the most liquid and popular currency pairs in the world. Considered a safe haven, USD/JPY can be influenced by factors like the disparity between the interest rates set by the Bank of Japan and the U.S. Federal Reserve.

 

USD/CHF

USD/CHF is the number of Swiss francs equal to one U.S. dollar. Also referred to as “trading the Swissie,” this pair is sometimes viewed as a safe haven due to Switzerland’s financial and political stability. Employment rates, GDP, and the disparity between interest rates dictated by the U.S. Federal Reserve and Swiss National Bank can impact the USD/CHF. 

 

USD/CAD

The USD/CAD currency pair is the number of Canadian dollars required to purchase a single U.S. dollar. As one of the most liquid and highly-traded symbols in the forex market, this pair is influenced by Federal Reserve activity in the U.S. market and certain commodity prices in Canada—such as crude oil. 

 

AUD/USD

As the fourth-most-popular currency pair in the world, the AUD/USD represents how many U.S. dollars are needed to purchase a single Australian dollar. Political events, interest rates, and Australian production of commodities such as coal or copper are factors that can impact AUD/USD. 

 

NZD/USD

NZD/USD represents the value of the New Zealand dollar against the U.S. dollar, or how many U.S. dollars are required to buy a single New Zealand dollar, or the kiwi dollar. New Zealand’s currency is typically listed in the top 10 most popular currencies in the world, while the U.S. dollar is the most traded currency.

Chapter 3 - Minor Currency Pairs

3

Minor Currency Pairs (Also Known as Cross Pairs)

What are minor currency pairs? 

Minor currency pairs, or cross currency pairs, don’t include the U.S. dollar, which is the top traded currency across the globe. However, minor pairs do include at least one of the world’s three most-traded currencies—the British pound, the Japanese yen, and the euro. 

 

Examples of minor currency pairs

EUR/GBP: Euro/British pound

The EUR/GBP currency pair represents how many British pounds are required to buy one euro. Because this pair includes two major European currencies, it’s one of the most popular currency pairs across the globe. 


EUR/AUD: Euro/Australian dollar

The EUR/AUD currency pair represents how many Australian dollars are required to purchase a single euro. This pair is often used as a way to gauge global risk. 


GBP/JPY: British pound/Japanese yen

The GBP/JPY currency pair represents how many Japanese yen are required to buy a single British pound. The yen is the third-most-popular currency in the world, while the British pound is the fourth-most-traded currency. 

 

CHF/JPY: Swiss franc/Japanese yen

The CHF/JPY currency pair represents how many Japanese yen are required to buy a single Swiss franc. The yen is the third-most-popular currency in the world, and both of these currencies are often perceived as safe-haven currencies because of their low interest rates.

 

NZD/JPY: New Zealand dollar/Japanese yen

The NZD/JPY currency pair represents how many Japanese yen are required to buy a single New Zealand dollar, or kiwi dollar. The yen is the third-most-popular currency in the world, and the kiwi dollar is typically listed in the top 10 most popular currencies in the world. 

 

GBP/CAD: British pound/Canadian dollar

The GBP/CAD currency pair represents how many Canadian dollars are required to buy a single British pound. One of the most popular traded currencies across the globe, the Canadian dollar, or “loonie,” is viewed as a commodity currency due to the country’s high number of energy exports. 

Chapter 4 - Exotic Currency Pairs

4

Exotic Currency Pairs

What are exotic currency pairs? 

An exotic currency pair includes one of the top 10 most traded global currencies with another currency from a developing country. Exotic currency pairs are the third most popular in the modern forex market.

 

Examples of exotic currency pairs:

EUR/HUF: Euro/Hungarian forint

This pair indicates how many Hungarian forints it takes to purchase one euro. The forint only became accessible to the global market in 2021, and this pair has been volatile in recent years. 

 

EUR/PLN: Euro/Polish zloty

This pair indicates the value of the Polish zloty against the euro. Once considered a currency similar in value to the euro, the 2008 global financial crisis caused the zloty to lose more than one-third of its value compared to the euro, one of the world’s top currencies. 

 

EUR/TRY: Euro/Turkish Lira 

This pair indicates the value of the Turkish lira against the euro. The lira has been revalued many times in previous attempts to reduce inflation. Meanwhile, the euro represents one of Europe’s largest economies. 

 

USD/ZAR: U.S. dollar/South African rand

This pair indicates the value of the U.S. dollar against the South African rand. The U.S. dollar represents one of the strongest economies in the world, and the rand is the official currency of South Africa, Namibia, Lesotho, and Eswatini.

 

USD/SEK: U.S. dollar/Swedish krona

This pair indicates the value of the U.S. dollar against the Swedish krona. Because Sweden houses many multinational companies and tech-based businesses, the krona is typically viewed as a safe-haven currency, while the American dollar is the most-traded currency across the globe. 

 

USD/RUB: U.S. dollar/Russian ruble

This pair indicates the value of the U.S. dollar against the Russian ruble. Appreciation of the U.S. dollar—the most highly traded currency worldwide—and interest rates have negatively impacted the ruble’s value in the past, but revenue from exporting oil and gas has helped increase its worth in 2022. 

 

USD/NOK: U.S. dollar/Norwegian krone

This pair indicates the value of the U.S. dollar against the Norwegian krone, the official currency of Norway. The krone is issued and circulated by Norges Bank, the central banking system of the Scandinavian country. The American dollar is the most highly traded currency in the world. 

 

USD/MXN: U.S. dollar/Mexican peso

This pair indicates the value of the U.S. dollar against the Mexican peso. Providing marketing opportunities in Latin America, the peso is extremely liquid and one of the most highly traded worldwide currencies. In fact, it’s the third-largest currency in the Western Hemisphere behind the American and Canadian dollars.

 

USD/DKK: U.S. dollar/Danish krone

This pair indicates the value of the U.S. dollar against the Danish krone, the currency used in Denmark, Greenland, and the Faroe Islands. The krone is considered part of the European exchange rate mechanism, which helps lower exchange rate volatility in European countries. The American dollar is one of the most highly traded global currencies. 

 

USD/HKD: U.S. dollar/Hong Kong dollar

This pair indicates the value of the U.S. dollar against the Hong Kong dollar, which is used in Hong Kong and Macau. The Hong Kong dollar is the ninth-most-traded currency across the globe and is pegged to the U.S. dollar, the most popular currency in the world. 

 

USD/CNH: U.S. dollar/Chinese offshore yuan

This pair indicates the value of the U.S. dollar against the Chinese offshore yuan, which is used outside of mainland China (considered the onshore market). 

 

USD/SGD: U.S. dollar/Singapore dollar

This pair indicates the value of the U.S. dollar against the Singapore dollar, the official currency of Singapore. The currency is issued by the country's central banking system, the Monetary Authority of Singapore. It’s the 12th-most-traded currency globally and the most traded in Asia. 

 

USD/CZK: U.S. dollar/Czech koruna

This pair indicates the value of the U.S. dollar against the Czech koruna, the currency of the Czech Republic. The currency is issued by the Czech National Bank in Prague. Although the landlocked country joined the EU in 2004, it still hasn’t implemented the euro as its official currency. 

 

USD/TRY: U.S. dollar/Turkish lira

This pair indicates the value of the U.S. dollar against the Turkish lira, the national currency of Turkey. The lira has been revalued many times in previous attempts to reduce inflation and has been considered one of the least valuable currencies globally at certain times in the past. The American dollar is one of the top-traded worldwide currencies. 

 

USD/HUF: U.S. dollar/Hungarian forint

This pair indicates the value of the U.S. dollar against the forint, the official currency of Hungary. Issued by the Hungarian National Bank, the forint only became accessible to the global market in 2021. Like the Czech Republic, Hungary also hasn’t adopted the euro, even though it’s a member of the EU. 

Chapter 5 - How to Trade Forex Successfully

5

How to Trade Forex Successfully Starting with One Pair

Are you new to the forex market and unsure how to dive in? A journey of a thousand miles begins with a single step, so start small with a single pair! Dealing with a single currency pair offers numerous advantages. Not only does it help trades stay focused, but it also eliminates the risk of trading correlated pairs. 

Here’s how to get started:

1. Pick a pair.

No specific currency pair is right for everyone. When looking at different pairs, consider the following questions: 

  • Is the pair’s market active when I’m trading? Although the forex market operates 24 hours a day during weekdays (Mon to Fri), some pairs are less active during the day. 
  • What’s the spread? The larger the spread, the lower the profit. Look for currency pairs with low spreads, like EUR/JPY, AUD/JPY, EUR/USD, and GBP/USD. 
  • Are you following the currencies of the pair you want to trade? Sticking to a pair that includes your own country’s currency means you have a thorough understanding of how it works.

 

2. Educate yourself.

Even if you’ve previously traded stocks and assets, the forex market is a unique game that is vastly different in terms of the data traders need to analyze. 

Many people enter the forex market ill-prepared and unwilling to develop the skills and attributes required to succeed. Learning how to be a successful forex trader and understanding the forex market takes time and patience. Before getting started with your pair, you should have an in-depth understanding of forex trade analysis along with any trading rules and best practices that can increase the likelihood of long-term success. 

Want to dive deeper? Learn more about how the right types of indicators can help interpret market sentiment, how to understand leverage in forex trading, how to set stop-losses, how to identify and interpret relevant political or economic events, and more.

 

3. Understand your market and plan your strategy. 

When trading a single currency pair, it’s helpful to familiarize yourself with market phase—the market’s current stage of price movement—and then plan accordingly using the right technical analysis.  

The following questions can help: 

  • Under what conditions will I enter a trade?
  • How much am I committing to the trade?
  • When and under which circumstances will I close the trade?

Any form of technical analysis that monitors pure price action can benefit your forex trading strategy. Technical analysis can apply to any market globally, and closely watching price movements is a great way to predict price movement and identify the most likely outcome.

 

4. Be patient.

Learning and mastering any new skill takes significant time, hard work, and patience. Every trader’s strategy is different, and navigating the forex market successfully takes persistence and the ability to learn from one’s mistakes. Setting aside a few hours a day to learn more about currency pairs and forex trading can significantly boost your potential to earn. 

Read 5 Strategies for Trading in the Forex Market.

Want to get started? Open a demo account today! 

Chapter 6 - What Currencies Can I trade with Valutrades

6

Which Currencies Can I Trade with Valutrades?

  • NZD/USD — New Zealand dollar/U.S. dollar
  • EUR/GBP — Euro/British pound 
  • EUR/JPY — Euro/Japanese yen 
  • GBP/JPY — British pound/Japanese yen
  • GBP/CAD — British pound/Canadian dollar
  • CHF/JPY — Swiss franc/Japanese yen
  • EUR/AUD — Euro/Australian dollar
  • NZD/JPY — New Zealand dollar/Japanese yen
  • EUR/TRY — Euro/Turkish lira
  • USD/HKD — U.S. dollar/Hong Kong dollar
  • JPY/NOK — Japanese yen / Norwegian krone
  • NZD/SGD — New Zealand dollar/Singapore dollar

 

Chapter 7 - FAQs

7

FAQs

What are the benefits of opening a live account?

Read more: 8 Benefits of Trading with Valutrades

If you are still unsure about opening a live account, please feel welcome to practice and test our services on our free demo account which is available for both Valutrades UK and Valutrades Seychelles: 

 

How do I open a live account with Valutrades?

Thank you for choosing to open a Valutrades UK and/or Valutrades Seychelles account.

For all information on how to open the account and complete the application process please watch the below video:

 

If you have any questions related to this topic please do not hesitate to contact our customer service team by live chat, phone (+442031410888) or email (support@valutrades.com).

 

close chapters modal

Download a PDF version of this guide

Master Guide to Currency Pair Ebook Cover