Yes, all currencies are always traded in pairs. Knowing this, traders always know that he/she will always have “more” of one currency and “less” of the other. For example, when trading from EUR/USD, the exchange of euros to dollars would mean that the trader has “less” euros and “more” dollars. Despite the fact that there is no physical interchange in FX trading, the principle and consequences are very much just as real as any.
Speaking Of Currencies, What Currencies Are Typically Traded In The Foreign Exchange Marketplace?
While some dealers may trade in exotic currencies, the forex market typically trades with the seven most liquid currency pairs in the world:
- Euro to US Dollar
- US Dollar to Japanese Yen
- British Pound to Dollar
- Dollar to Swiss Franc
- Australian Dollar to US Dollar
- US Dollar to Canadian Dollar
- New Zealand Dollar to US Dollar
These currency pairs along with various combinations of the above, such as the Euro to the New Zealand Dollar, make up a high percentage of all FX trading.