Now, moving on right, you will learn what is a currency pair? What is the base and code currency? What are the different types of currency pairs? So, let's get started number one. What is a currency pair, so one thing to note is that you trade currency in pairs, not as a standalone. So just like you know, when you go to a supermarket to buy an orange, you don't say: hey i want to buy some orange. They will tell you yeah, you want to buy some orange right, but you have, to you know, exchange right, your money for an orange, so same thing for currency pairs right when you want to trade currencies, you have to exchange one currency for another currency.

You can't just say i want to buy some euros, then the other person on the or the other party will be thinking. Sure you're gon na buy some euros. So what are you giving me in exchange? So this is why currency pairs, or rather, why currencies right trade in pairs, not as a standalone, so in essence right currency pairs, help you measure a currency's value against another currency. So, for example, let me explain right euro against the dollar, so when you, let's say, buy the euro dollar in essence, what you're doing is you're buying the euro, currency right and you're selling the us dollar.

So in essence, right when you are buying the euro you're, giving the other party us dollars in exchange for the euro currency, so just like you're buying an apple from the supermarket you're, giving your money in exchange for that apple, so it works in pair. Likewise, for dollar against the yen, you are buying the us dollar and in return right, you give the other party, japanese yen, make sense moving on what is a base currency or what is a base currency. So let me explain: the base currency is in essence right. The first currency that appears in a currency pair, so this will illustrate so, for example, euro against the dollar.

The first currency of the pair is called a base currency and i'll explain why shortly so? What is a code currency? So the code currency is the second currency that appears in the currency pair and for the euro dollar example. The us dollar is the code currency, and now you might be wondering hey wayne and what's the purpose purpose of all this man. So let me explain the purpose of all this is to tell you how much it cost in one in code currency to buy one based currency. I know that sounds like a technical mouthful, so i'll break it down, very simply, which i i've actually done earlier.

So, for example, euro dollar at 1.3500, what it means is, you know that euro is the base currency right, let's call it b base and the dollar as mentioned is the quote currency, let's put it q. So this tells you how much it costs in code currency to buy one based currency. So in essence, what this tells you is that for one euro dollar it will cost you one dollar and 35 cents usd. So let's say you go to a money.

Changer hey! I want to buy one euro man and the guy said sure my man give me one dollar and 35 cents usd and i'll give you one euro, that's how it works right and that's how you kind of interpret this right. Okay, it tells you how much it costs in code currency to buy one based currency, and i think that should be a pretty self-explanatory. If you don't understand this, just rewind this video and i'm pretty sure, you'll get it. So when you're trading currencies right, there are different types of currency pairs and i'll explain what are the three different types of currency pairs that you encounter number one is what we call the major currency pairs number two: we have cross currency pairs and number three exotic Currency pairs, so let me explain major currency pairs.

These are in essence right, or rather they refer to the most traded currency pairs in the world. So these are the seven most traded currency pairs in the world. They're all dollar denominated, like you, know the euro against the dollar, the pound against the dollar dollar against the canadian et cetera. So if you are new to forex trading right now, this uh, i would say the seven currency pairs that you might want to consider starting.

I mean to trade first because they are usually uh i'll, say that transaction costs are lower due to lower spreads, and you know you get less slippages when trading this most seven most popular currency pairs. So these are the major currency pairs. The next one cross currency pairs. This refers to currency pairs, which are non-usd which doesn't have the usd you know, uh denomination in it.

So, for example, let's say you have: the euro crosses euro crosses simply means that the currency pairs that has the euro currency in it like the euro against the british pound euro against the aussie dollar euro against the new zealand dollar, then you have the pound crosses, Like pound yen, pound against the aussie dollar, pound against the new zealand dollar, etc, pretty pretty simple stuff and finally, the last type of currency pairs that we have is the exotic currency pairs. This is when one may, when one major currency pair is paired with a developing country's currency, so, for example, us dollar against the mexican peso. Us dollar is a major currency pair and mexican peso right. This is a developing country's currency.

So again, this meets the requirement right. One major currency is paired with a developing country's currency. Next, one, the euro against the turkish lira euro is a major currency. Turkish lira is a developing country's currency and finally, the indian rupee against the british pound again.

So this is what we mean by exotic currency pairs. So one thing to note right is that when you trade exotic currency pairs, the spread tends to be wider. So if you don't understand what the spread means right, don't worry as you progress on your trading journey. You understand, but in essence right the transaction cost to trade exotic currency pairs.

They are more expensive compared to the uh major currency pairs. So a quick recap number one currencies. They are traded in pairs, not as a standalone. The base currency is the first currency in the pair.

The code currency is the second currency in the pair, and then there are three types of currency pairs, major cross and exotics. So with that said, let's move on you.