# How Currency Pairs Work - Majors, Minors, Exotics > Currency pairs are the building blocks of forex trading. Here is a clear explanation of how they work and the differences between major, minor, and exotic pairs. **Tags:** currency-pairs, majors, minors, exotics, forex-basics **URL:** https://traderjournal.app/forex-basics/how-currency-pairs-work-majors-minors-exotics --- # How Currency Pairs Work - Majors, Minors, Exotics Every forex trade involves a currency pair. Understanding how pairs are quoted, what the different categories mean, and how liquidity varies across them is foundational knowledge for any forex trader. --- ## How a Currency Pair Is Quoted A currency pair shows the price of one currency expressed in terms of another. EUR/USD = 1.0850 means: 1 Euro costs 1.0850 US Dollars. The currency on the left (EUR) is the base currency. The currency on the right (USD) is the quote currency. The price tells you how much of the quote currency you need to buy one unit of the base currency. When you buy EUR/USD, you are buying Euros (base currency) and selling Dollars (quote currency). When you sell EUR/USD, you are selling Euros and buying Dollars. --- ## Major Pairs Major pairs are the most traded currency pairs in the world. They all involve the US Dollar on one side. - EUR/USD - Euro / US Dollar - GBP/USD - British Pound / US Dollar - USD/JPY - US Dollar / Japanese Yen - USD/CHF - US Dollar / Swiss Franc - AUD/USD - Australian Dollar / US Dollar - USD/CAD - US Dollar / Canadian Dollar - NZD/USD - New Zealand Dollar / US Dollar Major pairs have the highest liquidity (tightest spreads) and are the most predictable in terms of price behavior. They are recommended for beginning forex traders. --- ## Minor Pairs (Cross Pairs) Minor pairs, also called cross pairs, do not include the US Dollar. They are pairs between two of the other major currencies. - EUR/GBP - Euro / British Pound - EUR/JPY - Euro / Japanese Yen - GBP/JPY - British Pound / Japanese Yen - EUR/AUD - Euro / Australian Dollar - AUD/JPY - Australian Dollar / Japanese Yen Cross pairs generally have slightly wider spreads than majors and can move in ways that reflect both constituent currencies' individual movements rather than a simple dollar-denominated trend. GBP/JPY is one of the most volatile pairs among the crosses, popular among momentum traders but challenging due to the speed of its moves. --- ## Exotic Pairs Exotic pairs involve one major currency and one currency from an emerging or smaller economy. - USD/TRY - US Dollar / Turkish Lira - USD/ZAR - US Dollar / South African Rand - EUR/PLN - Euro / Polish Zloty - USD/MXN - US Dollar / Mexican Peso Exotics have wide spreads (much more expensive to trade per pip than majors), lower liquidity, and higher volatility. They are generally not recommended for retail traders, especially beginners. The spread cost alone often makes them unprofitable even with a good strategy. --- ## Choosing Which Pairs to Trade For beginners: start with 1-2 major pairs, typically EUR/USD and/or GBP/USD. These pairs have the tightest spreads, the most available analysis and content, and the most stable behavior relative to other instruments. As your experience grows and your journal accumulates data on your pairs, you can evaluate whether adding minor pairs improves or hurts your overall results. --- Download Trader Journal at android.traderjournal.app or ios.traderjournal.app to track your performance by currency pair.