One of the first things Forex traders both amateur and professional learn is how to read currency pairs. Forex traders quickly learn that the first currency listed in any pair is only worth something in relation to the second currency in that pair. As an example the pair EUR/USD tells the trader how much the Euro is worth in U.S. dollars. Forex traders know that only certain pairs can be traded and they all have symbols just as stocks have symbols. As an example the major currency pairs are listed below,

EUR/USD (euro/U.S. dollar)
USD/JPY (U.S. dollar/Japanese yen)
GBP/USD (British pound/U.S. dollar)
USD/CHF (U.S. dollar/Swiss franc)
USD/CAD (U.S. dollar/Canadian dollar)
AUD/USD (Australian dollar/U.S. dollar)
NZD/USD (New Zealand dollar/U.S. dollar)

The symbols are always listed in the order given above, but why? Markets need standardization and order in order to thrive and to facilitate trading. The first currency listed is the base currency and the second listed currency is the quote currency. The original standardization of currency pairs was done by the International Organization for Standardization, or the ISO. This organization is also responsible for setting industrial and commercial standards for international trade. This non governmental organization has a major influence in international commerce.

At first, since London traditionally has been the center for currency exchange the ISO put the UK at the top of the list so the currency pair GBP/USD makes perfect sense to Forex traders. The Euro started official trading on January 4, 1999 and took first position over the Pound in currency pair quotes. London bankers were aghast that another currency could displace the Pound in currency quotes. It was actually the international news agency Reuters that is responsible for the Euro GBP order.

As every Forex trader knows currencies have a hierarchy. Once this hierarchy was established Forex traders could always tell which currency would be listed first in any pair. The hierarchy is as follows,

Euro (EUR)
British pound (GBP)
Australian dollar (AUD)
New Zealand dollar (NZD)
United States dollar (USD)
Canadian dollar (CAD)
Swiss franc (CHF)
Japanese yen (JPY)

The higher the currency is on the list means it will be listed first in any currency pair. This hierarchy remains in effect to this day and is one of the least known Forex facts. In fact, many Forex traders would be at a loss to explain why currency pairs are structured the way they are.