FX Basics
Explaining Forex Pairs & Currency Symbols
A clear guide to how forex pairs work, the major/minor/exotic groups, the most traded symbols, and the pros and cons of focusing on major pairs.
Currency Pairs
Symbols
Department
OTM Academy
Category
Fundamental Analysis
What Are FX Pairs?
The foreign-exchange (FX) market is the world’s largest and most liquid, with daily turnover in the trillions. Before trading, know how pairs are grouped and quoted. Currencies are commonly classified into majors, minors (crosses), and exotics. Majors are the most liquid and widely quoted; minors and exotics are increasingly available but usually carry wider spreads and different volatility profiles.
Core Symbols You Should Know
USD – U.S. dollar: the world’s reserve currency; strongly influenced by Fed policy and U.S. data (GDP, jobs, inflation).
EUR – Euro: often slower than GBP/AUD; typical intraday ranges ~30–40 pips in calm markets.
GBP – British pound: more volatile than EUR; London/NY overlap can see ~100–150 pip swings.
JPY – Japanese yen: low-rate currency; can be irregular; daily ranges ~30–40 pips but spikes to 150+ pips occur.
AUD – Australian dollar: historically supported by relatively higher policy rates and commodity linkage.
Other important symbols: CAD, CHF, NZD.
Most-Traded Major Pairs
Common majors include:
EUR/USD
USD/JPY
GBP/USD
AUD/USD
Popular additional pairs: NZD/USD, USD/CAD, USD/CHF, AUD/CHF.
These pairs constantly re-price as trade flows, interest-rate expectations, and risk sentiment shift between their home economies. Majors generally feature the tightest spreads and deepest liquidity.
Choosing Pairs & What to Expect
There’s no single “best” pair—choose the ones you understand and can monitor. Majors often provide better trading conditions (tighter spreads, abundant data, frequent news). Regardless of the pair, always trade with a defined strategy and execution rules on your platform.
Volatility Example: USD/CHF 2015
In early 2015 the Swiss National Bank removed its EUR/CHF floor, triggering a sudden surge in CHF. USD/CHF dropped ~25% within minutes. Such shocks are rare, but they highlight why risk management (position sizing, stops) is essential—even in major pairs.
Where to Start
If you have insight into a particular economy, you may gravitate to its currency. Still, for most traders—especially new ones—major pairs are a practical starting point: tighter spreads, richer data, and clearer technicals. Test multiple pairs in a demo first, combine fundamental and technical analysis, and focus on the symbols you know best. Ready to take the first step? You’re in the right place.
