Courses / Trading Fundamentals
Currency Pairs Explained
Majors, minors, crosses, and exotics
Currency pairs are categorized by liquidity and spread:
Major Pairs (include USD, tightest spreads): EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD, NZD/USD
Minor/Cross Pairs (no USD, wider spreads): EUR/GBP, EUR/JPY, GBP/JPY, AUD/NZD, EUR/AUD
Exotic Pairs (major + emerging market, widest spreads): USD/TRY, USD/ZAR, USD/MXN, EUR/TRY
In every pair: - Base currency (first) = what you're buying/selling - Quote currency (second) = the price denomination - EUR/USD at 1.0850 means 1 EUR costs 1.0850 USD
Major pairs account for 80%+ of forex volume. As a beginner, stick to 2-3 major pairs.
Pro tip: EUR/USD is the best pair to learn on — most liquid, tightest spread, most resources available.
Pro tip: Learn the personality of each pair. GBP/USD is more volatile than EUR/USD. USD/JPY respects round numbers..
Common mistake: Trading exotic pairs as a beginner. Better: Exotics have wide spreads and unpredictable movements. Start with majors..
Key takeaways
- Majors include USD — tightest spreads, most liquid
- Crosses don't include USD — wider spreads
- Exotics involve emerging market currencies — widest spreads
- Start with 2-3 major pairs only
Quiz
- Which pair is NOT a major? Answer: EUR/GBP. EUR/GBP is a cross pair (minor) because it doesn't include USD.
- In EUR/USD, the base currency is: Answer: EUR. The first currency (EUR) is always the base currency in a pair.
Educational content, not financial advice.