What Does It Mean to Buy and Sell Currency Pairs?
In Forex, currencies are traded in pairs because money only has value when it is compared to something else.
When you place a trade, you are always doing two things at the same time:
- Buying one currency
- Selling another currency
This is why Forex is called a relative market, not an absolute one. You are not predicting whether a currency is “good” or “bad.” You are predicting which currency will perform better compared to the other.
That is the core idea behind buying and selling currency pairs.
Table of Contents
- What Does It Mean to Buy and Sell Currency Pairs?
- How Buying a Currency Pair Works
- How Selling a Currency Pair Works
- Understanding Bid Price and Ask Price
- What Is the Spread and Why It Matters
- Major Currency Pairs
- Major Cross-Currency Pairs
- Minor Currency Pairs
- Exotic Currency Pairs
- G10 Currencies
- The Scandies
- CEE Currencies
- BRIICS
- BRICS+
- Liquidity and Volatility in Currency Pairs
- Simple Buy and Sell Examples for Beginners
- Key Takeaways About Buying and Selling Currency Pairs
How Buying a Currency Pair Works
When you buy a currency pair, you are saying:
“I believe the base currency will increase in value compared to the quote currency.”
Example:
- You buy EUR/USD
- You expect EUR to strengthen
- You expect USD to weaken relative to EUR
If the exchange rate rises, your trade moves in profit.
If the exchange rate falls, your trade moves into loss.
Buying does not mean you physically own euros. It means you are trading the price movement of the exchange rate.
How Selling a Currency Pair Works
When you sell a currency pair, you are saying:
“I believe the base currency will decrease in value compared to the quote currency.”
Example:
- You sell EUR/USD
- You expect EUR to weaken
- You expect USD to strengthen relative to EUR
If the exchange rate falls, your trade moves in profit.
If the exchange rate rises, your trade moves into loss.
Selling in Forex does not require owning the currency first. You are simply trading price direction.
Understanding Bid Price and Ask Price
Every currency pair has two prices:
- Bid price: the price at which you can sell
- Ask price: the price at which you can buy
If you buy, your trade opens at the ask price.
If you sell, your trade opens at the bid price.
The difference between these two prices exists in every market and leads directly to the concept of spread.
What Is the Spread and Why It Matters
The spread is the difference between the bid price and the ask price.
Spread is:
- A trading cost
- Paid automatically when you open a trade
- Smaller on liquid currency pairs
- Larger on volatile or exotic pairs
For beginners, lower spread pairs are generally easier to trade because costs are more predictable and execution is smoother.
Major Currency Pairs
Major currency pairs are the most actively traded currency pairs in the global market. These pairs always include the U.S. dollar (USD) on one side and represent the world’s most dominant and widely used currencies
Although there are eight major global currencies, there are only seven major currency pairs, since each major pair must include USD and a currency cannot be paired with itself. Because of their central role in international trade and finance, major currency pairs attract the largest number of market participants.
| Currency Pair | Countries | Common Name |
|---|---|---|
| EUR/USD | Eurozone / United States | Euro Dollar |
| USD/JPY | United States / Japan | Dollar Yen |
| GBP/USD | United Kingdom / United States | Pound Dollar |
| USD/CHF | United States/ Switzerland | Dollar Swissy |
| USD/CAD | United States / Canada | Dollar Loonie |
| AUD/USD | Australia / United States | Aussie Dollar |
| NZD/USD | New Zealand / United States | Kiwi Dollar |
Compared to cross and exotic pairs, major currency pairs tend to experience more frequent price movements. This does not necessarily mean larger moves, but it does mean prices update more often, creating more buy and sell opportunities throughout the trading day.
Major pairs are also the most liquid currency pairs in the Forex market. Liquidity refers to how easily a currency pair can be bought or sold without causing significant price changes. In Forex, liquidity is driven by the number of active buyers and sellers and the total trading volume in a specific currency pair. The more frequently a pair is traded, the higher its liquidity.
Major Cross-Currency Pairs
Major cross-currency pairs are non-USD pairs formed from major global currencies.
They are actively traded and reflect relative strength between major economies, without direct US dollar influence.
Euro Crosses
Euro crosses include the euro (EUR) paired with another major currency, excluding USD.
| Currency Pair | Countries | Common Name |
| EUR/GBP | Eurozone – United Kingdom | Euro Pound |
| EUR/CAD | Eurozone – Canada | Euro Loonie |
| EUR/CHF | Eurozone – Switzerland | Euro Swissy |
| EUR/AUD | Eurozone – Australia | Euro Aussie |
| EUR/NZD | Eurozone – New Zealand | Euro Kiwi |
| EUR/NOK | Eurozone – Norway | Euro Nockie |
| EUR/SEK | Eurozone – Sweden | Euro Stockie |
Yen Crosses
Yen crosses involve the Japanese yen (JPY) with another major currency, excluding USD.
| Currency Pair | Countries Involved | Common Name |
| GBP/JPY | United Kingdom – Japan | Pound Yen or guppy |
| EUR/JPY | Eurozone – Japan | Euro Yen or yuppy |
| AUD/JPY | Australia – Japan | Aussie Yen |
| CHF/JPY | Switzerland – Japan | Swiss Yen |
| CAD/JPY | Australia – Japan | Loonie Yen |
| NZD/JPY | New Zealand – Japan | Kiwi Yen |
Pound Crosses
Pound crosses involve the British pound (GBP) paired with another major currency, excluding USD.
| Currency Pair | Countries | Common Name |
| GBP/CAD | United Kingdom – Canada | Pound Loonie |
| GBP/NZD | United Kingdom – New Zealand | Pound Kiwi |
| GBP/CHF | United Kingdom – Switzerland | Pound Swissy |
| GBP/AUD | United Kingdom – Australia | Pound Aussie |
Minor Currency Pairs
Minor currency pairs are non-USD pairs that are less liquid than major crosses.
They are often traded for specific regional or thematic reasons.
Other Crosses
Other crosses include currency pairs that do not fit neatly into euro, yen, or pound cross categories.
| Currency Pair | Countries | Common Name |
| AUD/NZD | Australia – New Zealand | Aussie Kiwi |
| CAD/JPY | Canada – Japan | Loonie Yen |
| CHF/AUD | Switzerland – Australia | Swiss Aussie |
| NZD/JPY | New Zealand – Japan | Kiwi Yen |
Exotic Currency Pairs
Exotic currency pairs combine:
- One major currency
- One currency from a developing or emerging economy
| Currency Pair | Countries | Common Name |
| USD/BRL | Australia – Brazil | Dollar Real |
| USD/KHD | United States – Hong Kong | |
| USD/SAR | United States – Saudi Arabia | Dollar Riyal |
| USD/SGD | United States – Singapore | Dollar Sing |
| USD/ZAR | United States – South Africa | Dollar Rand |
| USD/MXN | United States – Mexico | Dollar Mex |
| USD/THB | United States – Thailand | Dollar Baht |
| USD/PLN | United States – Poland | Dollar Zloty |
| USD/CLP | United States – Chile | |
| USD/RUB | United States – Russia | Dollar Ruble or Barney |
Exotic pairs are generally not recommended for beginners.
G10 Currencies
The G10 currencies are the most liquid and widely traded currencies in the global Forex market.
| Country | Currency Name | Currency Code |
| United States | Dollar | USD |
| European Union | Euro | EUR |
| United Kingdom | Pound | GBP |
| Japan | Yen | JPY |
| Australia | Dollar | AUD |
| New Zealand | Dollar | NZD |
| Canada | Dollar | CAD |
| Switzerland | Franc | CHF |
| Norway | Krone | NOK |
| Sweden | Krona | SEK |
| Denmark | Krone | DKK |
Most major and cross pairs are built from G10 currencies.
The Scandies
The Scandies refer to Scandinavian currencies
| Country | Currency Name | Currency Code |
|---|---|---|
| Denmark | Krone | DKK |
| Sweden | Krona | SEK |
| Norway | Krone | NOK |
CEE Currencies
CEE (Central and Eastern Europe) currencies come from emerging European economies.
| Country | Currency Name | Currency Code |
|---|---|---|
| Hungary | Forint | HUF |
| Czech Republic | Koruna | CZK |
| Poland | Zloty | PLN |
| Romania | Leu | RON |
BRIICS
BRIICS represents a group of large emerging economies
| Country | Currency Name | Currency Code |
|---|---|---|
| Brazil | Real | BRL |
| Russia | Ruble | RUB |
| India | Rupee | INR |
| Indonesia | Rupiah | IDR |
| China | Yuan | CNY |
| South Africa | Rand | ZAR |
BRICS+
BRICS+ expands beyond BRIICS to include additional emerging economies aligned with the BRICS framework.
BRICS+ currencies are mainly observed for macro and long-term structural trends, not short-term speculation.
Liquidity and Volatility in Currency Pairs
Liquidity refers to how easily a currency pair can be traded without causing large price changes.
Volatility refers to how much the price moves.
- High liquidity usually means tighter spreads
- High volatility means larger price swings
Beginners often start with high-liquidity, moderate-volatility pairs to reduce unnecessary risk.
Simple Buy and Sell Examples for Beginners
Buy example:
- Pair: EUR/USD
- Expectation: EUR strengthens
- Action: Buy
- Result: Profit if price rises
Sell example:
- Pair: EUR/USD
- Expectation: EUR weakens
- Action: Sell
- Result: Profit if price falls
The logic never changes. Only your market expectation does.
Key Takeaways About Buying and Selling Currency Pairs
- Forex trading is always about relative value
- You buy one currency while selling another
- Buying means expecting the base currency to rise
- Selling means expecting the base currency to fall
- Bid, ask, and spread are essential concepts
- Understanding Types of Currency Pairs
