Forex basics; understanding what currency pairs or cross currency pairs is essential for all forex traders. Learn how to trade the fores markets online and make money by hedging currencies.

1. What are Currency Pairs,Cross Currency Pairs in Forex Market Trading?.

2. Each currency is recognized by a three-letter code. For example, EUR is the EURO and refers to the European currency, USD is the United States Dollar. The worlds leading currencies (often referred to as the majors) are the EUR, USD, JPY (Japanese Yen), GBP (the British Pound or Sterling), CHF (the Swiss Franc), AUD (the Australian Dollar) and the CAD (the Canadian Dollar).

3. For example looking at the EUR/USD the EUR is the leading currency and the USD is the secondary currency. The "currency pair" or "currency cross" is then followed by a number; this is typically a five digit number with a decimal point after the first, for instance 1.2660. Each Digit represents a unit of PiP’s

4. The number represents the ratio of one currency against the other, and can be read as "the amount of the secondary currency needed in order to have one unit of the major currency". In the example just given, EUR/USD 1.2660, one would require 1 Dollar and 26.6 cents to exchange for 1 Euro.

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