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Trade
Currency pairs in the Forex market
Every time we go to the store, we see the goods that can be purchased. For us it is so commonplace a situation that may not even reflect what is actually making the exchange. In this case, the funds are changed on a product. In this case, one can say that this product that he has acquired, is, for example, 100. It turns out that the product is assessed by the amount of money that we can get what we need.
But what if we need to acquire money? Indeed, why, then, is to assess such a product?On the international currency market Forex the money of one state are sold for the money of another country.
The designations of the major currencies - in this article, there are symbols and decoding of most popular currencies on the Forex.
If the trader works at the stock market, he has the opportunity to buy or sell stocks, futures and so on. At the same time bought and sold them for money, for example, in Russia in rubles. Goods in this case are just stocks and futures. In the currency market the situation is somewhat more complicated, because the product is just money.
Agree that buying ruble ninety cents is a not profitable business. Therefore, in the foreign exchange market is usually to buy and sell one currency for another currency through an ever-changing market rate.
Therefore, if you decide to buy euros for rubles, it will be just the purchase of a product, in this case euros. Trader in the Forex market just deals with the fact that buys or sells some of the monetary unit over the other. For example, if the trader decides to buy euros for rubles, he buys a currency pair Euro/ruble.
The pairing of currencies
What is currency pair? This is the ratio of two different currencies, one of which is, so to speak, commodity, and second its price. It is possible to buy not only euros for rubles, but also Swiss francs for U.S. dollars, Australian dollars for yen and many more options available on the currency market.
Due to the fact that the exchange rate of currency pairs fluctuates constantly, speculators have an excellent opportunity to obtain some profit.
It is worth noting that the fluctuations of the currency pair is influenced by factors related to any of these currencies. This means that you have to follow closely any developments in the world economy and politics, which affect any currency in the pair, which we work on Forex.
The types of currency pairs
Quotes – how many units of currency, which is the second number in the pair, give a unit of currency, that stands first. For example, the currency pair EUR/USD = 1.3700. This means that per unit of Euro (EUR) is offered 1.37 US dollar (USD).
Quotes can be of three types:
1. direct currency quote
2. reverse currency quotation
3. cross – rate
foreign currency Direct quotation – quantity of the national currency for one unit foreign. For example, in Russia there are direct quotes when you assess the price of one us dollar (USD). In other words, USD/RUB = 30 means that for one us dollar offered 30 Russian rubles.
The currency that is listed first in the pair is the base currency. In direct currency quotes, the base currency is the US dollar. It turns out that the dollar acts in such cases a commodity.
Reverse currency quotation value of one national currency expressed in a definite number of units of foreign currency. Also the reverse is called the quote that shows how much $ is in the unit of the national currency. In this embodiment, the US dollar is not the first place in the couple and on the second. For example, EUR/USD or GBP/USD. Now goods are EUR or GBP, and buying them is available for US dollars (USD).
Cross-rate - the ratio between the two currencies, which derives from their exchange rates against a third currency. Most commonly, the cross rate against the U.S. dollar. That is, in the currency pair is not USD, but the dollar is still indirectly affects a few. For example, EUR/USD and USD/JPY. The cross EUR/JPY.
It is now clear that a currency pair is simply the ratio of one currency to another. Forex decided to look for how many units of one currency you can buy a unit of another currency. There is a possibility to conduct trading operations in both directions, it is possible to earn on the growth of the market rate, and its fall. The existence of currency pairs allows to demonstrate the numerical expression of value of interest rates relative to other currencies.
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| Category: Forex | Added by: (06.11.2017)
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