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Foreign exchange ratesThe exchange rate is the parity between two currencies or the amount of one currency needed to sell (or buy) in order to buy (or sell) one unit (base currency) of the other currency. We can express currency rates as direct quotes or counter quotes. The direct quote expresses a country's local currency against the USD as well as against other foreign currencies or we could still simply put it as a currency pair in which the domestic currency is the base currency. E.g. for Japan the quote 102.32- 102.35 USD/JPY means that the dollar is bought for 102.32 Yen and sold for 102.35 Yen per unit. While the indirect quote is simply a currency pair where the domestic currency is the quoted currency. This type of quote is seen when trading the British Pound against the United States Dollars and can be expressed like this: 2.0000 - 2.0004 GBP/USD based on this quote you'll get paid 2.0004 U.S. dollars if you want to purchase 1 British Pound and if you wish to sell 1 GBP you'll get 2.0000 USD. Bid and offerForex rates (as mentioned several times before) are quoted as two-way rates. Thus a EUR/USD quoted as 1.5712/1.5715 would mean buy marks (selling dollars) at 1.5715 and sell marks (buying dollars at 1.5712). In simple terms it buys cheaper and sells dearer a given currency in exchange for the other one. The difference between the buy and sell marks is called "spread", and varies across currency pairs according to market volatility. Basis points or pipsBasis points are integer parts with usually 4 or 2 decimal points. They are expressed either at 10th thousandth or hundredth, like 0.0001 or 0.01 and are called basis point or pip. We could express 10 basis point change of 1.3000 is 1.3010. A good forex tutorial should not only cover these aspects but should delve in topics that discuss other topics like spot and forward rates, interest rates, swap rates, forward rates, swaps, money management, candle stick studies, and fundamental data studies. Some random articles: The Use of Forex Mini Trading You have traded Forex in demo for months. Your understanding of your strategy and trading plan is good, your percentage of successful trades is high. You feel are ready for the real thing! Do you p... (read more) Forex Killer Review Download directly from the publisher There is a lot of raving going on about this software, it appears to be a very efficient tool that can help you to make a lot of money from home using just few ... (read more) |
