Which Currencies Are Traded in FOREX?

In theory, any currency backed by an existing nation can be traded against any other currency. In practice, trading volume of the major currencies dominate the action. Given in descending order (along with their symbols), they are the U.S. Dollar (USD), the Euro Dollar (EUR), the Japanese Yen (JPY), the British Pound Sterling (GBP), the Swiss Franc (CHF), the Canadian Dollar (CAD), and the Australian Dollar (AUD). See Table .
All other currencies are referred to as minors and those from smaller countries, exotics. The New Zealand Dollar (NZD) is often included with the majors. The Chinese Yuan is the only currency of a major player not represented in the interbank market today. The Chinese have used this to great advantage, but there is a yin and yang in everything....

Major FOREX Currencies

SymbolCountryCurrency
USDUnited StatesDollar
EUREuro membersEuro
JPY_JapanYen
GBPGreat BritainPound
CHFSwitzerlandFranc
CADCanadaDollar
AUDAustraliaDollar

There are 21 [6 + 5 + 4 + 3 + 2 + 1] possible pairs to trade with just these seven currencies. Adding the New Zealand dollar -- NZD -- brings that total to 28.

FOREX currency symbols are almost always three letters, by which the first two letters identify the name of the country and the third letter identifies the name of that country's currency. (The CH in the Swiss Franc acronym stands for Confederation Helvetica.)

Once again: A FOREX transaction is always between two currencies. This often confuses new traders coming from the stock or futures markets in which every trade is denominated in dollars. The price of a pair is the ratio between their respective values. Pairs, crosses, majors, minors, and exotics are terms referencing specific combinations of currencies. I discuss these in The Language of FOREX. They are also defined in the Glossary.
By Michael Duane Archer
Michael Duane Archer has been an active futures and FOREX trader for more than 35 years. He has worked in various advisory capacities, notably as a commodity trading advisor, registered SEC investment advisor, and branch manager for Heinold of Hawaii. He currently trades FOREX and futures and is involved in several technical analysis research projects.

Copyrighted 2016. Content published with author's permission.

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