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
Symbol	Country	Currency
USD	United States	Dollar
EUR	Euro members	Euro
JPY_	Japan	Yen
GBP	Great Britain	Pound
CHF	Switzerland	Franc
CAD	Canada	Dollar
AUD	Australia	Dollar

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.