Established in 1947, ISO established a standard for country and Forex currency pair abbreviations. Since foreign currencies are quoted in terms of value of one currency against another, a Forex currency pair consists of an acronym for both currencies, separated by a slash "/".
For example:
| Acronym | Currency |
|---|---|
| GBP | Great British Pound |
| EUR | Euro |
| CHF | Swiss Franc (Confoederatio Helvetica Franc) |
| USD | United States Dollar |
| CAD | Canadian Dollar |
| JPY | Japanese Yen |
| AUD | Australian Dollar |
| NZD | New Zealand Dollar |
Currencies are always traded in pairs, for example EUR/USD, USD/JPY. Every position requires the buying of one currency and selling of another. When someone says they are "buying the EUR/USD", they are buying Euros and selling Dollars.
There are many other Forex currency pairs available to trade, such as the Danish Krone, Mexican Peso, and Russian Ruble. However, these currency pairs are generally traded less, and are not considered major currencies.
Market increments are measured in PIPs, or Percentage in Point. A pip is the fourth except for Japanese Yen crosses, where a pip is the second digit.
For example, let's assume a Forex trader buys 1 standard lot of GBP/USD. The current exchange rate is 1.96150. Essentially this trader is buying £100,000 in exchange for $196,150. Again, for examples sake, assume the Forex market rate rose 15 PIPs to 1.96300 and the trader liquidates the position. The same £100,000 is now worth $196,300, the trader realizing a $150 profit.
Try our pip calculator from our Forex trading tools section to calculate your own pip values.
Some Forex currency pairs are traded more heavily than others. The currency pairs that have the most volume consist of the "majors". It is widely agreed that the following 6 pairs are considered the majors:
Nicknames are sometimes used for currency pairs. Here is a list of Forex currency pairs and commonly used nicknames for each:
| Currency | Nickname |
|---|---|
| GBP | Pound, Cable, Sterling |
| EUR | Euro |
| CHF | Swissy, Franc |
| USD | Dollar, Greenback |
| CAD | Cad, Loonie |
| JPY | Yen |
| AUD | Aussie |
| NZD | Kiwi |
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