Sunday, 27 September 2009

Forex Pairs: Introduction What is forex pairs?

Forex Pairs: Introduction

What is forex pairs?

Two different currencies having different exchange rates are traded together in the forex retail market. Basically, all trades in forex retail market involve buying the currency of one kind and selling the currency of another simultaneously. The currency pair can be considered as one unit.

In a currency pair, the currency that you buy is called the base currency and the one that you sell is called the quote currency. The bid or in other words, the buying price is said to represent the amount of quote currency needed to have one unit of the base currency. The method of calculating the exchange rates between the forex pairs is done by multiplying the base currency to the factor which is equivalent to the value or purchasing power of foreign currency. These exchange rates of the currency are floating, which means they keep on changing in a continuous fashion according to various multitudes of factors.

One can choose from various forex pairs that are available. These forex pair currencies are subdivided into minor and major currencies. USD, GBP, JPY, CHF, AUD and CAD fall under the category of Major foreign currencies. All other currencies except these seven major ones fall under the category of minor currencies. Some examples of Minor currencies are NZD and ZAR i.e. the South African Rand and many more. Here is an example to show how to find out the value of a forex pair. If it is written that CHF/JYP is worth 84.50, it means that one Swiss franc is equivalent to 84.50 Japanese Yen.

Availability of forex pair is also an important factor. Availability of these pairs could also be found from the website for Trading of foreign currencies. Various websites and internet are common sources for people to participate in forex trading and infact learn about it. Various tutorials are also available on the internet for this. Infact using internet for forex trading is easy and fast over the conventional ways of forex trading.

One must have a keen interest and knowledge about changing economies of the world if he or she wants to have a good hand in forex trading. Markets around the world are actually the driving force behind rise and fall in values of Forex pairs.

If one is a starter in forex pairs trading, one can seek help of PIPs. PIPs are indicators for the market where forex pairs are traded. PIP stands for Price Interest Point. It helps one by representing the smallest fluctuation in the price of a currency pair. As a starter if one wants to make profit, he or she should start with popular pairs. One can try a hand at those currencies which a generally strong. There is no fool proof strategy that one can use as template. Technical traders generally rely on trend lines, resistance levels, support and a variety of mathematical analysis and charts to identify trading opportunities in forex markets

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