What is a worked example of major vs minor pairs?
A worked example of major vs minor pairs is a complete numerical scenario that shows how the same calculation method works for both types of pairs. It compares (1) how the pair is defined and (2) how price movement translates into an outcome metric, while stating every assumption used in the arithmetic.
For this article, major pairs are currency pairs that include widely traded “major” currencies, and minor pairs are pairs that do not include all the most widely traded majors (but still trade in the foreign-exchange market). The exact membership list can vary by provider and context, so the example below is about the mechanics that remain consistent even when the label changes.
Mechanism: what you calculate in a worked example
In spot FX, a pair like EUR/USD is quoted as:
- Base currency / Quote currency (EUR is base, USD is quote).
When the pair price moves by
- +1 pip (or the smallest quoted increment used by your pricing convention), the value of the position in the quote currency changes.
A worked example typically needs these inputs (assumptions):
- Starting price (no live data assumed).
- Ending price (a hypothetical move).
- Trade direction (buy base vs sell base). This determines whether the result is positive or negative.
- Position size (how much base currency you control).
- Pip definition (for many FX majors, a pip is commonly 0.0001; other pairs may use different pip conventions).
- How you convert the result into a common unit if needed.
Stable mechanics: the math uses base/quote roles and the change in the quoted price. What varies with conditions: liquidity, spreads (transaction costs), and execution quality—especially for pairs that are less liquid.
Evidence or example: one scenario that compares both pair types
Assumptions used for both examples
To keep the comparison transparent, assume the following:
- We measure movement in pips based on a common convention where 1 pip = 0.0001.
- We use a hypothetical price move: the pair changes by +50 pips for the “up move” case.
- We use the same position size definition in each pair: 10,000 units of the base currency.
- We do not include spreads, commissions, financing, or slippage.
These assumptions are intentionally simplified so you can verify the conversion steps.
Example A (major pair): EUR/USD
- Starting price: 1.1000
- Ending price: 1.1050 (that is +0.0050 = 50 pips)
- Position: Buy EUR (long the base)
Result metric (in USD, the quote currency):
- For EUR/USD, with 10,000 EUR, a +0.0001 change corresponds to a quote-currency change.
- A +50 pip move is +0.0050.
- Hypothetical profit in USD terms (ignoring costs) is:
- 10,000 EUR × 0.0050 USD/EUR = 50 USD
Example B (minor pair): GBP/JPY
Now we switch to a minor-style pair that does not use USD as quote.
- Starting price: 150.00
- Ending price: 150.50 (again, +50 pips under the stated 0.0001 rule; note this is a simplification)
- Position: Buy GBP (long the base)
- Quote currency is JPY, so the “profit” metric is in JPY from the price move.
Hypothetical profit in JPY terms (ignoring costs):
- Price change: +0.50
- Position: 10,000 GBP
- 10,000 GBP × 0.50 JPY/GBP = 5,000 JPY
What the comparison shows
Using identical direction and an assumed pip move, the mechanical effect is consistent: profit/loss scales with (a) position size and (b) price change in quote-currency terms.
But the numerical result differs because the quote currency differs (USD vs JPY) and because pip conventions may not match across pairs in real quotes. This is exactly why a worked example must state assumptions.
Limitations and risks: what can make the “worked example” differ from reality
- **Provider definitions can vary. ** What counts as “major” vs “minor” may differ across platforms. 2. **Pip conventions may differ. ** Some pairs may quote with different increments, so “50 pips” can mean different absolute price changes. 3. **Costs are not included here. ** Real outcomes depend on spread, commissions, execution speed, and possible slippage. 4. **Conversion to a common currency can change totals.