When currencies are traded on the Forex market, they are bought and sold in what are known as currency pairs, where one currency is used to buy another.
These pairs have been created to make comparing currencies easier, and as a way to better understand the value of one in relation to the other. The EUR/USD pairing is among the most popular.
In currency pairs, the first currency is the base and the second currency is referred to as the counter currency. So in the previous example, you are using USD to buy EUR. Your broker converts your existing currency into USD, and then uses that to buy EUR. When buying a currency pairing, you take what is known as a 'long position', and when selling you take a 'short position'.
It is vital that you have a good understanding of the current climate of your chosen currency market. If you believe people are going to sell bitcoin, for example, then this will bring the price down in relation to the EUR.
We provide regularly updated information on many popular pairings, and we include the popular Bitcoin cryptocurrency in our currency index.
The majority of Forex traders focus on the following currency pairs: EUR/USD, USD/JPY, GBP/USD, and USD/CHF are the main four, followed by USD/CAD, AUD/USD and NZD/USD. All other pairs are just different combinations of the same currencies.