When you trade forex online, you are actually trading foreign currency pairs. That is why instead of seeing single symbols such as EUR or JPY you see pairs, for example EURUSD and GBPJPY. It is really easy to understand these pairs; EURUSD means you are looking at the value of Euro compared to the US Dollar. In forex trading, there are four major currency pairs you should understand first before you get started.
EURUSD – or often announced as EUR/USD – is the first major currency pair you need to understand. With an average daily movement of 100 pips, EURUSD is the perfect currency pair to trade if you are relatively new to forex trading in general. A lot of professional traders are focusing more on EURUSD because of the wealth of information available on the currency pair, allowing you to make accurate trading decisions and do fundamental analysis easily.
Next, we have the GBPUSD. It is a pair that represents the British Pound compared to the US Dollar. Make sure you approach this pair with care because it is considered one of the most volatile currency pairs in forex. Expect an average daily movement of 150 pips.
You can also trade USDCHF, or US Dollar vs. Swiss Franc. This is the best pair to use if you want to measure the strength of USD. If you are trading EURUSD, for example, you can monitor the movements for USDCHF to get better insights on the USD’s performance.
Last but not least, we have the USDJPY or US Dollar vs. Japan Yen. It is the fourth major currency pair and it has a daily average movement of 100 pips as well.