valuuttaehdot

Valuuttaehdot, or currency pairs, are the foundation of foreign exchange trading. A currency pair expresses the value of one currency in relation to another. For example, in the pair EUR/USD, the euro (EUR) is the base currency, and the US dollar (USD) is the quote currency. This means the pair indicates how many US dollars are needed to buy one euro.

The first currency listed in a pair is always the base currency, and the second is the quote currency. The value of the currency pair, often referred to as the exchange rate, shows how much of the quote currency is required to purchase one unit of the base currency. In the EUR/USD example, if the exchange rate is 1.1000, it means 1 euro can be exchanged for 1.1000 US dollars.

Currency pairs are broadly categorized into major, minor, and exotic pairs. Major pairs involve the US dollar and are the most frequently traded. Minor pairs do not include the US dollar but involve other major currencies like the euro, yen, or pound. Exotic pairs consist of one major currency paired with the currency of a smaller, emerging economy. Understanding currency pairs is crucial for anyone engaging in forex trading, as it dictates profit or loss based on currency fluctuations.