Currency Pair Convention Naming and Currency Pair Nicknames

How are Currencies Named in the Market?

To learn the conventional naming formats used to name currency pairs in the market we shall first look at how currencies are named & then look at how forex pairs are named. Understanding these naming formats is one the basics as currency pairs are the main instruments being traded in the market.

Currency Pair Convention Naming Format

The naming format has three letters, explanation of each letter is illustrated below:

First two letters - identify name of country

Last letter - identify the currency

Example:

USD= US A Dollar

This name is also commonly referred to as a symbol, therefore for US Dollar, the name or symbol is USD.

Example of Convention Currency Pair Names & Convention Currency Pair Symbols

How Currencies are Transacted in the Trading Market?

Forex Trading is the buying of one currency with another currency, exchanging the money for a different currency of the same value, through a bank or a broker, who acts as the custodian.

Since one currency is traded for another currency, each trade transaction is exchanged in pairs of two - called a currency pair, for example, EURUSD. When a trade transaction is made it is the simultaneous buying of one currency and automatically selling the other currency. So if you buy EUR you automatically sell USD and vice versa.

Examples of Convention Currency Pair Names and Convention Currency Pair Symbols

Example of Convention Currency Pair Names and Convention Currency Pair Symbols