What to know about currency pair

What to know about currency pair

June 27, 2021 Off By Leo

Before embarking on forex trading at exness, there is a need-to-know what currency pair is all about. Currency pair refers to the quotation which exists between two separate currencies, with the value of one of them being quoted against the other one. The first currency to be listed of currency pair is referred to be base currency and the next to be referred to as quote currency.

The currency pairs normally compare the value of one currency to the next – the first currency or base currency versus quote currency or the second currency. It is indicative on how much quote currency required in order to purchase one unit of base currency.

Currencies are normally identified by the currency code of ISO, or the three alphabetic letter codes which they are associated with on the international market. For the United States of America dollar, its ISO code is USD.

Understanding more about the currency pairs

The trading currency pairs are normally conducted in the forex market which is also called the foreign exchange market. It is known to be the largest and most liquid market when it comes to the financial world.

The market allows for being able to buy, exchange, sell and speculate of the currencies. It is also one that enables the currency conversion for the international investment and trade. The forex market normally opens 24 hours in a day, for five days in a week which includes most of the holidays, and sees a large amount of volume trading.

All the traders in forex get involved in concurrent buying of a currency and selling of the other currency, but in itself the currency pair is believed to beone unit – which is an instrument which is sold or bought.

When you are purchasing currency pair from a forex broker, you will be buying base currency and be selling quote currency. On the other hand, when you are selling the currency pair, you will be selling base currency and receiving quote currency.

The currency pairs are normally quoted based on the buy (bid) and sell (ask) prices. The bid price refers to the price which the forex broker is buying base currency from you to exchange for the counter or quote currency. The ask which at times is referred to as the offer is the price which the broker will be selling base currency in exchange for the counter or quote currency.

When you are trading in currencies, you will be selling one particular currency to be able to buy for the other. On the other hand, when you trade for stocks or commodities, you will be utilizing cash in buying a unit of the commodity or a number of shares of a certain stock. The economic data that relate to currency pairs like interest rates and the economic growth or GDP – gross domestic product, is known to affect the prices of the pairs which are trading.