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πŸ“ Instruments β€” Pairs, Pips, and Exposure Types

How a currency quote works​

Every Forex transaction involves two sides: you are always buying one currency and simultaneously selling another. This is why currencies are always quoted in pairs.

For a pair like EUR/USD = 1.0850:

EUR  /  USD  =  1.0850
 ↑       ↑       ↑
Base   Quote   Price

β†’ 1 Euro buys 1.0850 US Dollars
  • Buying EUR/USD = you believe the Euro will rise against the Dollar.
  • Selling EUR/USD = you believe the Euro will fall against the Dollar.

Currency pair categories​

Major pairs β€” the G7 bloc​

Always include USD. Approximately 85% of global Forex volume. Tightest spreads and highest liquidity.

PairNameApprox. daily share
EUR/USDEuro / US Dollar~22%
USD/JPYUS Dollar / Japanese Yen~13%
GBP/USDBritish Pound / US Dollar~10%
USD/CHFUS Dollar / Swiss Franc~5%
AUD/USDAustralian Dollar / US Dollar~5%
USD/CADUS Dollar / Canadian Dollar~4%
NZD/USDNew Zealand Dollar / US Dollar~2%

Minor pairs (crosses) β€” no USD​

Two major currencies, no dollar. Good liquidity, slightly wider spreads.

PairNameTypical spread
EUR/GBPEuro / British Pound1.0–2.5 pips
EUR/JPYEuro / Japanese Yen1.0–2.5 pips
GBP/JPYBritish Pound / Japanese Yen2.0–4.0 pips
EUR/AUDEuro / Australian Dollar1.5–3.0 pips
AUD/JPYAustralian Dollar / Japanese Yen1.5–3.0 pips

Exotic pairs β€” emerging markets​

One major currency plus an emerging market currency. Wide spreads, high volatility.

PairNameTypical spread
USD/TRYUS Dollar / Turkish Lira10–50+ pips
USD/ZARUS Dollar / South African Rand10–40 pips
USD/MXNUS Dollar / Mexican Peso5–20 pips
USD/BRLUS Dollar / Brazilian Real20–80+ pips

Pips, pipettes, and ticks​

TermDefinitionExample (EUR/USD)
PipStandard minimum price move β€” 4th decimal for most pairs, 2nd for JPY pairs1.0850 β†’ 1.0851 = 1 pip
Pipette1/10th of a pip β€” 5th decimal (or 3rd for JPY)1.08501 β†’ 1.08502 = 1 pipette
TickSmallest real price movement recordedUsually = 1 pipette

Pip value by lot size (EUR/USD)​

Lot nameUnitsPip value (EUR/USD)Required margin at 1:100
Standard100,000$10.00$1,000
Mini10,000$1.00$100
Micro1,000$0.10$10

Bid, ask, and spread​

Every quote in Forex has two prices:

EUR/USD:
  Bid: 1.08520  ← price broker buys from you (your sell price)
  Ask: 1.08525  ← price broker sells to you (your buy price)
  Spread: 0.5 pip

The spread is the built-in cost of every trade. In liquid pairs like EUR/USD, it can be under 1 pip. In exotics, it can be tens of pips β€” making short-term trades on exotics very difficult to profit from.

:::info On HyperFX Spread revenue on HyperFX flows directly into the liquidity pool β€” distributed to liquidity providers, not taken by a broker. See How Liquidity Works for the breakdown. :::

Types of Forex exposure​

Spot market​

The most common form. Buy or sell a currency pair at the current market price, with settlement in D+2. Most retail traders access spot via CFDs (see below).

CFDs (Contracts for Difference)​

The instrument used by HyperFX. You speculate on the price difference between open and close β€” no physical currency is exchanged. Allows leverage and both long and short positions. See What is a CFD? for a full explanation.

Futures​

Standardized contracts traded on exchanges (CME, B3). Fixed lot size and settlement date. Centralized clearing. In Brazil, the DΓ³lar Futuro (DOL) contract on B3 is one of the most liquid instruments in the country.

Forwards​

Bilateral agreements to exchange currencies at a future date at a pre-agreed price. Not traded on exchanges. Used primarily by corporations for FX hedging.

FX options​

The right (not obligation) to buy or sell a currency at a specific price on a future date. More complex, typically used by institutions for hedging or structured products.

Study resources​

ResourceDescription
Investopedia β€” PipPip calculation with examples
BabyPips β€” LotsLot sizes and leverage explained
Investopedia β€” CFDWhat a CFD is and how it differs from spot
CME FX ProductsHow Forex futures contracts work professionally

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