Forex stands for the Foreign Exchange market. Each country has its own regulated currency, and the Forex market is a place for trading in all such currencies. The trading of currencies happens in pairs, such as EUR/USD, GBP/USD, USD/JPY, etc. to cite a few examples. It is the largest and most liquid market in the world.

Ask price is the price at which a FOREX trader buys a currency pair, whereas the Bid Price is the price at which a FOREX trader sells a currency pair. The difference between the Ask Price and the Bid Price is termed as “Spread”. Thus, Spread = Ask Price – Bid Price.

In the forex market, currencies which have the maximum trading volumes against the US Dollar are referred to as the Major Currencies. These currencies are characterized by high liquidity and narrower spreads. USD, GBP & EUR are some prime examples of Major Currencies. In stark comparison to the major currencies, Exotic Currency Pairs are those pairs which are relatively illiquid and have higher spreads.