Major Pair — Definition & Meaning in Forex Trading

CFD

Contract for Difference. A derivative product that allows traders to speculate on price movements without owning the underlying asset. Most retail forex trading in the EU is done via CFDs.

Cross Pair

A currency pair that does not include the US dollar. Examples include EUR/GBP, EUR/JPY, and GBP/CHF. Cross pairs can have wider spreads than major pairs.

Exotic Pair

A currency pair that includes one major currency and one currency from an emerging or smaller economy, such as USD/TRY or EUR/ZAR. Exotics typically have wider spreads and higher volatility.

ADR (American Depositary Receipt)

A certificate issued by a US bank representing shares in a foreign company trading on US exchanges. ADRs allow US-based trading of international stocks. Some forex brokers offer ADR CFDs alongside currency pairs.

Basis Point

One hundredth of a percentage point (0.01%). Used primarily to measure changes in interest rates and bond yields. A central bank raising rates by 25 basis points increases them by 0.25%. In forex, basis point changes in rates drive significant currency movements.

Bond

A debt instrument issued by governments or corporations to raise capital. Bonds pay periodic interest (coupon) and return the principal at maturity. Bond yields and prices influence forex markets through interest rate expectations and capital flow dynamics.