💱 What Is Traded in Forex? Understanding Currencies and Market Correlations

💱 What Is Traded in Forex? Understanding Currencies and Market Correlations

Meta Title: What Is Traded in Forex? | Understanding Currencies & Correlations – Quant Funded
Meta Description: Learn what is traded in the Forex market — from major and minor currency pairs to global correlations that drive price action. Master Forex trading with Quant Funded.

Introduction: The World of Forex Trading

The foreign exchange market (Forex) is the world’s largest and most liquid financial market, where global currencies are bought and sold 24 hours a day.
With over $7.5 trillion in daily trading volume, Forex outpaces every other financial market in scale and opportunity.

But what exactly is traded in Forex?
At its core — currencies. Yet behind these currency pairs lies an intricate web of economic correlations, macro factors, and institutional flows that shape price movement. Understanding these relationships is key to success, especially for professional traders at Quant Funded, where precision and strategy define performance.

The Foundation: What Is a Currency Pair?

In Forex, currencies are traded in pairs — one currency is bought, and the other is sold simultaneously.
Each pair consists of:

• Base Currency: The first currency listed in the pair (e.g., EUR in EUR/USD).
• Quote Currency: The second currency (e.g., USD in EUR/USD).

If the EUR/USD rate is 1.1200, it means 1 euro = 1.12 U.S. dollars.

This structure allows traders to speculate on whether the base currency will appreciate or depreciate relative to the quote currency.
For example:

• Going long (buy) on EUR/USD means you expect the euro to strengthen against the dollar.
• Going short (sell) means you expect the euro to weaken.

At Quant Funded, funded traders use this relationship to take positions based on fundamental and technical analysis — combining global economic data with real-time chart structures.

The Three Categories of Forex Pairs

The Forex market is divided into majors, minors (crosses), and exotics. Each category reflects the pair’s liquidity, volatility, and trading characteristics.

🏦 1. Major Currency Pairs


The majors are the most liquid and heavily traded pairs, always including the U.S. dollar (USD).
These account for over 80% of all global Forex transactions.

These pairs offer tight spreads, deep liquidity, and consistent volatility — ideal for both intraday scalpers and swing traders in Quant Funded’s evaluation programs.

💹 2. Minor or Cross Currency Pairs

Minor pairs, or crosses, exclude the U.S. dollar but include major global currencies such as EUR, GBP, JPY, or AUD.

Examples include:

• EUR/GBP
• AUD/JPY
• GBP/JPY
• NZD/CHF

Cross pairs are often less liquid but can offer diversified opportunities. For instance, if a trader expects strength in the euro but weakness in the pound, they can directly trade EUR/GBP instead of involving USD.
This flexibility allows Quant Funded traders to avoid USD exposure when needed, especially during major U.S. data releases or FOMC events.

🌍 3. Exotic Currency Pairs

Exotic pairs combine a major currency with one from a developing or smaller economy, such as:

• USD/TRY (U.S. Dollar vs. Turkish Lira)
• EUR/ZAR (Euro vs. South African Rand)
• USD/SGD (U.S. Dollar vs. Singapore Dollar)

These pairs offer higher volatility and wider spreads, making them riskier but potentially more rewarding.
Experienced traders sometimes use exotics to hedge or diversify exposure when global volatility spikes.

The Power of Correlations in Forex Trading

The Forex market is deeply interconnected — not only among currency pairs but also with commodities, indices, and macroeconomic cycles. Understanding correlations helps traders anticipate market reactions and avoid overexposure.

⚙️ 1. Positive and Negative Correlations

• A positive correlation means two assets move in the same direction.
  Example:
  • AUD/USD and NZD/USD → Both are commodity-linked currencies and usually rise or fall together.
• A negative correlation means they move in opposite directions.
  Example:
  • EUR/USD and USD/CHF → When the euro strengthens, the Swiss franc often weakens against the dollar, and vice versa.

Quant Funded traders use correlation analysis to manage portfolio exposure — ensuring multiple trades don’t unintentionally compound risk on the same directional bias.

🛢️ 2. Currencies and Commodities

Many currencies are linked to commodity exports, making them highly sensitive to price fluctuations.

For example, if oil prices surge, USD/CAD typically falls, reflecting CAD strength. Recognizing such correlations allows funded traders to anticipate movement even before technical confirmation.

🏦 3. Currencies and Stock Indices

Currencies also correlate with equity markets — as investor sentiment shifts between risk-on and risk-off environments:

• During risk-on periods, traders favor higher-yield currencies like AUD, NZD, and GBP.
• During risk-off sentiment, they move toward safe-havens like JPY, CHF, and USD.

At Quant Funded, traders often analyze the S&P 500, DXY (U.S. Dollar Index), and VIX (volatility index) alongside currency charts to align macro context with trade setups.

🪙 4. Currencies and Cryptocurrencies

An emerging correlation exists between crypto markets and risk sentiment.
When Bitcoin rallies, traders often see temporary weakness in safe-haven currencies — signaling a shift toward risk-on optimism.

Though not directly linked, crypto movements increasingly impact global liquidity flows — something professional traders must monitor in the evolving digital economy.

Applying This Knowledge as a Funded Trader

Understanding what’s traded in Forex is not just theory — it’s part of your edge as a Quant Funded trader.
When you manage capital through our 2-Phase Challenge, knowledge of currency behavior and correlations helps you:

1. Diversify exposure: Avoid stacking trades that all depend on the same bias.
2. Predict price reactions: Anticipate moves based on commodities or indices.
3. Improve consistency: Trade multiple correlated pairs with balanced risk.
4. Strengthen analysis: Combine macro correlations with Liquidity Trading Concepts (LTC) or technical setups.

Conclusion: Trade Smart, Trade With Understanding

Forex isn’t just about buying and selling currencies — it’s about understanding how the global financial ecosystem connects.
Every move in oil, gold, or equity indices has ripple effects across currencies.
By learning how these instruments and correlations interact, you become more than a trader — you become a strategist.

At Quant Funded, we empower traders to master these dynamics with real capital, advanced analytics, and a global prop trading network.
The better you understand market relationships, the faster you grow — both in consistency and funding potential.

✅ Start Your Trading Journey with Quant Funded

• 🌍 Join the  Quant Funded Challenge today.
• 💼 Prove your consistency.
• 💰 Trade up to $400,000 in real capital with performance-based scaling.

👉 Visit www.quantfunded.com to begin your journey as a professional funded trader.