There are three different sorts of currency pairings: major pairs, minor pairs and exotic pairs. Currencies are always exchanged in pairs, such as the USD/ INR pair. The USD is a major component of major currency pairs like USD/ JPY, which stands for the US Dollar and the Japanese Yen. Minor currency pairs, such as INR/GBP, which stands for the Indian Rupee and Great Britain Pound Sterling, pit other major currencies against each other instead of the US Dollar. Exotic currency pairs, such as the Japanese Yen and the Norwegian Krone, comprise one main and one minor currency.
Base currency and Quote currency
A backslash is used to indicate a currency combination, as in INR/JPY, by writing both currencies together and then separating them. A currency pair has two currencies: a base currency on the left and a quote currency on the right. The Japanese Yen would serve as the quote currency in our case, with the Indian Rupee serving as the base currency. A currency pair's base currency is always valued at 1, hence the INR/JPY pair means that, at the current exchange rate of 1.60, one may purchase one Indian Rupee for 1.60 Japanese Yen.
A pip, or price point, is the smallest fluctuation or alteration in the value of a currency pair.
Simply said, spread is the discrepancy between the ask price and the bid price. As a result, in the example we used above, the spread would be equal to 78.7236 - 78.7233, or 0.0003.
Bid and Ask price
The price to buy the base currency is the bid price, and the price to sell it is the ask price. For instance, if the USD/INR exchange rate is quoted as 78.7233/78.7236, it implies that purchasing one US Dollar will cost 78.7236 Indian Rupees and selling a Dollar will yield 78.7233 Indian Rupees.
Currency derivatives are exchanged in lots, similarly to how stock derivatives are. A lot size is the minimum number of units that must be purchased or sold under a contract.