Forex trading is a continuous buying of one currency and selling another. Currencies are traded through a broker or dealer and are traded in pairs.
Currencies are quoted in relation to another currency.
For example, the euro and the U.S. dollar (EUR/USD) or British pound and therefore the Japanese yen (GBP/JPY).
When you trade the forex market, you purchase or sell in currency pairs. An rate of exchange is that the relative price of two currencies from two different countries.
Exchange rates fluctuate supported which currency is stronger at the instant. There are three categories of currency pairs- “majors” “crosses” and “exotics”.
The major currency pairs always include the U.S. dollar.
Cross-currency pairs do not include the U.S. dollar. Crosses that involve any of the major currencies are also known as “minors”.
Exotic currency pairs contain one major currency and one currency from an emerging market (EM).