Since foreign currencies are quoted in terms of the value of one currency against another, a currency pair consists of an acronym for both currencies, separated by a forward slash "/". These acronyms were established in 1947. Listed below are just a few examples:
Currencies are always traded in pairs, for example EUR/USD, USD/JPY and so on. Every position requires the buying of one currency and selling of another. When someone says they are "buying the EUR/USD", they are buying Euros and selling US Dollars.
There are many other currency pairs available for trade, such as the Danish Krone, Mexican Peso, and Russian Ruble. However, these currency pairs are generally traded less and are not considered major currencies.
Some currency pairs are traded more heavily than others. The currency pairs that have the most volume consist of the "majors", which are widely considered to be the following:
For example, let's assume a forex trader buys one standard lot of GBP/USD. The current exchange rate is 1.9615. Essentially this trader is buying 100,000 Pounds in exchange for $196,150. Again, for example's sake, assume the forex rate rose 15 pips to 1.9630 and the trader liquidates his position. The same 100,000 Pounds can now yield $196,300, bringing the trader a $150 profit.
Nicknames are sometimes used for currencies as follows: