In the trading universe, there’s an international forex market where various currency pairs are exchanged daily. Online currency trading is quite different from stock trading. It has been common in India. It allows you to buy one specific type of currency by using the other, which explains currency trading in a nutshell.
If you intend to start with currency trading in India, then it’s crucial you know the five major types of currency pairs being traded in the country. Thus, it will help you build a stronger portfolio in this trading aspect.
This currency pair indicates how many US dollars you must spend to buy one euro. Here, the dollar is the quote or denominator currency, whereas EUR is the base currency.
EUR-USD supposedly has a negative correlation with the USD-CHF currency pair but a positive correlation with the GBP-USD pair. It is possible as the Euro, British Pound and Swiss franc share a positive correlation too.
This currency pair indicates how much Japanese Yen you need to spend to buy one US dollar. Here, the Japanese Yen is the quote currency, whereas the US dollar is the base currency.
This pair positively correlates with that of USD-CAD and USD-CHF pairs, as USD is the base currency for all of these pairs.
It is one of the many currency pairs that Indians popularly prefer for currency trading. Here, the US Dollar is the quote currency, and the British Pound is the base currency. It determines how many US dollars you must spend to buy one British Pound.
This pair shares a positive correlation with EUR-USD and a negative correlation with USD-CHF. It is possible because the British Pound, Euro and Swiss franc share a positive correlation.
Implementing online currency trading with this pair determines how many US dollars you have to spend to acquire one Australian Dollar. It is one of the most traded currency pairs, not just in India but across the world.
All of the pairs with USD as the currency negatively correlate with AUD-USD.
The amount of Canadian Dollars you need to spend to get one US dollar is what trading this currency pair means. Here, Canadian Dollar is the quote or denominator currency, whereas the US dollar is the base currency.
This pair negatively correlates with the GBP-USD, EUR-USD and AUD-USD pairs. It is because the dollar is the denominator currency in all these pairs.
This is a small understanding of the five most common types of currency pairs that Indians are trading on. These pairs are considered major because of their high liquidity and trading volume in the foreign exchange market. USD is considerably the pillar of all major currencies in terms of quote or base for all pairs.
These pairs contribute towards a large chunk of forex trading. Thus, even though the options are for Indians to trade on currencies, they still have access to the best pairs worldwide.