Every forex trade happens in a currency pair. You never simply "buy the euro" or "sell the yen" — you buy one currency while selling another at the same time. Understanding how pairs are structured, and how the market splits them into majors, minors and exotics, is one of the most practical pieces of beginner knowledge in forex, because the category a pair belongs to directly affects your spreads, liquidity and risk.

How a currency pair is quoted

A currency pair shows the relative value of one currency against another. The first currency in the pair is the base currency, and the second is the quote currency (sometimes called the counter currency). Pairs are written using the three-letter ISO 4217 codes of each currency, separated by a slash — for example, EUR/USD.

When you see EUR/USD quoted at 1.1000, it means one euro buys 1.1000 US dollars. If the quote moves from 1.2500 to 1.2510, the euro has strengthened by 10 pips against the dollar; if it falls to 1.2490, the euro has weakened. Whether you buy or sell, you are always on one side of a two-sided price: the bid (what you sell at) and the ask (what you buy at), with the difference between them — the spread — being the most common transaction cost.

The majors

The most heavily traded pairs in the world are called the majors. They involve the US dollar alongside one of the other heavily traded currencies: the euro, Japanese yen, British pound, Australian dollar, Canadian dollar or Swiss franc. The six majors are commonly listed as EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF and USD/CAD.

Their status is not a convention — it shows up directly in the market data. The Bank for International Settlements (BIS) Triennial Central Bank Survey, the most comprehensive source on global over-the-counter FX activity, found that trading in OTC FX markets averaged $9.6 trillion per day in April 2025, and that the US dollar was on one side of 89.2% of all trades, up from 88.4% in 2022. The euro's share of global turnover was 28.9%, the Japanese yen's 16.8%, and sterling's 10.2%. The BIS also notes that the ten most traded currency pairs all involve the US dollar, reflecting its role as the world's vehicle currency.

For you as a trader, this concentration has a practical consequence: the majors are the deepest, most liquid markets in the world. Deep liquidity typically means tighter spreads, and tighter spreads mean lower cost every time you enter and exit a position. It also means large orders are less likely to move the market against you or be filled at prices far from what you expected — although even the most liquid pairs can see spreads widen during major news events or thin trading hours.

Minors and cross pairs

Pairs that do not involve the US dollar are called cross currency pairs, or crosses — for example GBP/JPY or EUR/GBP. Pairs that involve the euro are often called euro crosses. Together with the majors, the most liquid non-USD pairs are often grouped as minors.

Crosses let you express a view about two currencies without taking a position on the dollar at all. The trade-off is that they generally carry wider spreads than the majors, because the liquidity is thinner. Many crosses are still very actively traded — GBP/JPY is a well-known example with meaningful daily movement — but you should expect costs somewhere between the majors and the exotics.

Exotic pairs

Exotic pairs combine a major currency — such as USD, EUR, GBP or JPY — with a currency that is thinly traded in the FX market. Examples include EUR/TRY, USD/SGD, USD/HKD and GBP/SEK. Because trading volume in these currencies is lower, there is less market depth, which typically leads to wider spreads and larger price gaps between quotes.

It is worth understanding where the volume actually sits. In the BIS 2025 survey, even fast-growing pairs involving non-traditional currencies remain a small slice of the total: USD/CNY accounted for 8.1% of global turnover (up from 6.6% in 2022), USD/CHF 4.9%, and USD/HKD 3.6%. Meanwhile the renminbi's overall share reached 8.5% and the Hong Kong dollar's 3.8%. Everything outside the heavily traded cluster is, by definition, far thinner — and that thinness is what makes exotics riskier.

The risks are concrete rather than theoretical:

• Wider spreads and higher costs. A spread of several pips or more is common on exotics, versus sub-pip spreads on many major pairs.

• Gaps and slippage. Thin markets can jump past your stop-loss level, and stops are not guaranteed to execute at your chosen price.

• Event and policy risk. Many exotic currencies are managed by their central banks, subject to capital controls, or exposed to local political and economic shocks that have no parallel in the majors.

• Variable leverage and availability. Some regulated brokers restrict leverage or availability on exotic instruments; the rules that apply to you depend on your jurisdiction and your broker's terms.

Exotics are therefore usually treated as an experienced-trader instrument, not a starting point.

What this means for your trading costs

The category of a pair translates directly into how much each trade costs you. The pip — the smallest quoted price increment — is worth a different dollar amount depending on the quote currency, so the same spread width can mean very different money.

A worked illustration (these numbers are illustrative examples, not live broker quotes): on a standard lot of 100,000 units, one pip on EUR/USD is worth $10. A typical sub-pip spread of 0.8 pips therefore costs about $8.00 per standard lot traded. On GBP/JPY, one pip is worth ¥1,000 per standard lot; at an illustrative USD/JPY rate of 150 that is about $6.67 per pip, so a 2.0-pip spread costs roughly $13.33. On an exotic such as USD/ZAR, one pip is worth about $0.54 at an illustrative rate of 18.5, so a wide 30-pip spread costs around $16.22.

The pattern to take away: the wider the spread and the thinner the market, the more of every trade you give up to cost — and on exotics you pay that higher cost on top of elevated volatility and gap risk.

Choosing where to start

There is no universally "best" pair — the right choice depends on your strategy, your risk tolerance and what your broker offers. That said, some trade-offs are worth weighing deliberately:

• Liquidity and cost point toward the majors. If your priority is tight spreads and reliable order execution, the majors are where the market is deepest.

• Crosses offer specific currency views. If you have a view on, say, sterling versus the yen, a cross expresses it directly instead of routing your trade through two USD positions.

• Exotics demand experience. Wider spreads, gap risk and event risk mean position sizes should be smaller and stop-loss placement more conservative — if you trade them at all as a beginner.

• Check your broker's actual terms. Spreads, available pairs, leverage and margin rules vary by broker, account type and jurisdiction. What is true in general for a pair category may differ on the specific account you open.

Trading forex involves significant risk of loss, and leverage can amplify both gains and losses. Pair categories describe liquidity and cost characteristics — they are not a guarantee of outcomes on any specific trade.

Key takeaways

• A currency pair quotes one currency against another: the base currency first, the quote currency second, written with ISO 4217 codes such as EUR/USD.

• The majors (EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, USD/CAD) dominate global FX turnover; the BIS 2025 survey recorded $9.6 trillion of daily OTC FX turnover, with the US dollar on one side of 89.2% of trades.

• Cross (minor) pairs exclude the US dollar — e.g. GBP/JPY, EUR/GBP — and typically carry wider spreads than the majors.

• Exotic pairs combine a major currency with a thinly traded currency (e.g. EUR/TRY, USD/SGD), bringing lower market depth, wider spreads and higher gap and event risk.

• Pair category affects trading cost per pip and per spread; illustrative standard-lot examples show roughly $8–$16 of spread cost per lot across categories.

• No pair category is universally better; availability, spreads and leverage vary by broker, account type and jurisdiction.