In the forex market, exchange rates are given in currency pairs. The most important concept to understand this quote is “the relative value of the two currencies.” For example, in the currency pair EUR/USD, EUR is called the base currency and USD is called the quote currency.
In the forex market, each currency is uniformly represented by three English letters. This is actually a set of currency codes, ISO 4217, an international standard developed by the International Organization for Standardization to denote currency names. At the international trading level, ISO codes are used by people for the convenience of quotation, reading, communication, etc. Banks and corporations around the world also use currency codes, and it’s not hard to see banks publish each currency exchange rate by using currency code rather than any translated name or currency symbol.
Forex is the short form of “foreign exchange”. Forex trading, so called FX trading, is referring to those transactions of foreign currency. International trade requires a considerable amount of foreign currency for settlement, so “Forex” also means the foreign currency used as international settlement.
Currencies that are frequently traded and commonly seen in the forex market are called “major currencies”, based on the volume of global transactions. According to the Bank for International Settlements (BIS)2019 statistics, the most commonly traded currencies, from the highest volume to the lower, are US dollar, Euro, Japanese Yen, British Pound, Australian Dollar, Canadian Dollar, Swiss Franc, Chinese Yuan.
