7 currencies are most traded in forex market.

Currencies that are are traded in dollar amounts are called “lots”. A single lot is equal to $1,000, that controls $100,000 in currency also well known as the “margin”. It is all about controlling $100,000 worth of currency for only 1,000 dollars, called “High Leverage”.
Well known fact is that most currencies are traded in pairs in the FOREX Market.

There are some of the common symbols used in the Forex:

* USD – The US Dollar
* EUR – The currency of the European Union “EURO”
* GBP – The British Pound
* JPN – The Japanese Yen
* CHF – The Swiss Franc
* AUD – The Australian Dollar
* CAD – The Canadian Dollar

It is not possible currency to be traded by itself, like a single thing. Even EUR is not an exception. To be the trade possible, It is necessary to compare one currency with another currency.

Some of the most common and well known PAIRS are:

EUR/USD Euro / US Dollar
“Euro”

USD/JPY US Dollar / Japanese Yen
“Dollar Yen”

GBP/USD British Pound / US Dollar
“Cable”

USD/CAD US Dollar / Canadian Dollar
“Dollar Canada”

AUD/USD Australian Dollar/US Dollar
“Aussie Dollar”

USD/CHF US Dollar / Swiss Franc
“Swissy”

EUR/JPY Euro / Japanese Yen
“Euro Yen”

There are generally recognized standards of which currency will be identified as the base currency in any given pair, having in mind that forex currency pairs can be quoted with either currency as the base currency.

The Euro is one of the main dominant base currency against all other global currencies around the world. Usually USD takes third place after British Pound, which is second in the hierarchy of currency name domination. As well as the only case where the USD is not the base currency of a pair is where the Australian & New Zealand dollars take the place. You should also know that currencies paired with the EUR will always be identified with the EUR acronym first in the sequence.

Every single foreign exchange transaction world wide is an exchange between two of the mentioned currencies, where everyone has an unique three-letter code. The basic thing about currency pairings is that they are two codes usually separated by a division symbol. For example: GBP/USD, USD/JPY and so on. The first one is the “base currency” and the other is named “secondary currency” as it should be. The base currency is the one, which you are buying or selling.

What is an exchange rate? This is the price of one currency in terms of another. Here is an example: GBP/USD = 1.5545 which means that one unit of sterling – the base currency can be traded/exchanged for 1.5545 US dollars – the secondary currency. It is easy to be understood.

“Majors Pairings” are the ones with US dollar. The “big four” Majors Pairings are well know. They are:

* EUR/USD: euro/US dollar
* GBP/USD: sterling/US dollar (known as “cable”)
* USD/JPY: US dollar /Japanese yen
* USD/CHF: US dollar/Swiss franc

The name crosses refers to pairings of non-U.S. Dollar currencies from the aforementioned major pairings. Here an examples:

EUR/GBP EUR/JPY GBP/CAD GBP/CHF AUD/CAD CHF/JPY
EUR/CHF EUR/AUD GBP/JPY AUD/JPY AUD/NZD CHF/NZD

There are a lot of currencies around the world, where some of them are not easily traded on the open forex market. Exotic pairings involve currencies not included in the eight major currencies. But some speculators will venture into, when we are talking about these exotics. These Exotic pairings are really unattractive to most traders, because they are very wide and the degree of risk makes them so unwanted as a trading tool.

Seven categories of forex currencies:

Top currency

During the era of territorial money, we can say that only two currencies could truly be have qualified for this exalted status and they are Britain’s pound and U.S. dollar. You might ask why, well – Britain’s pound sterling before World War I and the U.S. dollar after World War II. This rarefied rank is reserved only for the most esteemed of international currencies – those whose use dominates for most if not all types of cross-border purposes and whose popularity is more or less universal, not limited to any particular geographic region.

Patrician currency

Obviously included in this category today would be the euro, as natural successor to the DM; most observers would still also include the yen, despite some recent loss of popularity. Both are patricians among the world’s currencies.Just below the top rank we find currencies whose use for various cross-border purposes, while substantial, is something less than dominant and/or whose popularity, while widespread, is something less than universal.

Elite currency

Here we find the more peripheral of the international currencies, a list that today would include inter alia Britain’s pound (no longer a Top Currency or even Patrician Currency), the Swiss franc, and the Australian dollar. This category belong currencies of sufficient attractiveness to qualify for some degree of international use but of insufficient weight to carry much direct influence beyond their own national frontiers.

Plebian currency

Plebian Currencies are just one step further down from the elite category – more modest monies of very limited international use. These are the currencies of the smaller industrial states, like Sweden or Norway. Also some middle-income emerging-market economies such as Israel, South Korea, and Taiwan and the wealthier oil-exporters, which are Kuwait, Saudi Arabia, and the United Arab Emirates.

Internally, Plebian Currencies contain more or even less exclusive claim to all the traditional functions which money have, but we should know that they carry little weight like like the plebs, or common folk, of ancient Rome. Internally, Plebian Currencies tend to attract little cross-border use except perhaps for a certain amount of trade invoicing.

Permeated currency

Here in this category are monies, which competitiveness is effectively compromised even at home. That means through currency substitution. Although nominal monetary sovereignty continues to reside with the issuing government, foreign currency supersedes the domestic alternative as a store of value, accentuating the local money’s degree of inferiority.

According to available evidence, it appears that the range of Permeated Currencies today is in fact quite broad, encompassing perhaps a majority of the economies of the developing world, particularly in Latin America, the former Soviet bloc, and Southeast Asia. Permeated Currencies confront what amounts to a competitive invasion from abroad.

Quasi-currency

Quasi-Currencies are superseded not only as a store of value but to a significant extent, as a unit of account and medium of exchange, as well. These currencies are monies largely rejected in practice for most purposes, because of the retain nominal sovereignty. Available evidence suggests that some approximation of this intensified degree of inferiority has indeed been reached in a number of fragile economies around the globe, including Azerbaijan, Bolivia, Cambodia, Laos, and Peru.Their domain is more juridical than empirical.

Pseudo-currency

And at last in this list are Pseudo-currency – the in bottom rank of the this pyramid. Most common examples of this group are token monies like the Panamanian balboa, which has been found in countries where a stronger foreign currency such as the dollar is the preferred legal tender.