When speaking with those who haven't tried auto forex trading before, even if they are familiar with th eworld of bonds, futures, or even stocks, it makes me remember that for this global market, even the very basics must be explained. So let's jump right into what the pairings mean, what the main pairings are, and what the cross pairings are .
What exactly is a currency pair ? We'll begin with the Eur/Usd this has as the base currency the US dollar against the Euro . What is the meaning of the pari when I have a price quote that is 1.3200 on the Eur/Usd? Here is the easy way you can keep the answer in mind : take the base currency pair , the US dollar here, take a look at the 1.3200 price quote , and then say , " 1.3200 US dollars are needed to purchase 1 Euro." The price quote means exactly that . Maybe you look a few weeks later at the price quote and now it is 1.4000 then that means the US Dollar as gotten weaker against the Euro since it now will take you 1.4000 US dollars to purchase just one Euro. On the other hand, if a couple months later the price quote is then 1.25000 , then the US Dollar has become stronger because now it will only take 1.2400 US Dollars to buy 1 Euro .
Auto forex trading can be especially challenging when for the Usd/Jpy pair you see a price quote that is 100.50. Using the above method , you take the Jpy base currency and look at the 100.50 price quote and to purchase one US dollar this is the amount of Jpy it takes . Isn't that fairly easy? You should no longer have problems figuring out the price quote on a pair when you see a quote window or chart screen .
Now that we know how to read the price quotes , what are the main and cross pairs ? You'll find the main pairs happen to be the strongest world economies paired versus the US dollar. A few of these pairs are Eur/Usd, Gbp/Usd, Aud/Usd, Usd/Cad, Usd/Jpy, and Nzd/Usd . Cross pairs do not involve the US dollar such as Eur/Jpy, Gbp/Jpy or Eur/Gbp to name a few of the more popular ones .
Hopefully this article will be of help to you if you find you're intimidated by the auto forex trading landscape in the past . You may need a bit of time to get used to this with all of the different currency pairs, time zones, and economies . Once you begin realizing how the pieces all go together it really is not too hard - and many of us think it's actually quite fun
