The basic elements of foreign exchange currency trading

{}Posted in2023/2/26 4:08:54 | 4Browse

Exchange rates fxrebatecentral spreads All currencies come with an abbreviation f forexrebatecommission an international standard agency code In best forex rebate company trading, these codes are often used to indicate which specific currencies make up a group of currency pairs For example, EUR/USD refers to two currencies: the euro and the U.S. dollar bestforexrebatecompany exchange rate The exchange rate rebatesforexbroker simply the rate at which one currency is exchanged for another The first is called the cashback forex currency, the second is called the If you make a purchase, the exchange rate represents the relative or denominated currency you must pay to obtain the base currency If you sell, the exchange rate represents the relative or denominated currency you receive for selling the base currency EUR/USD (EUR/USD) Base Currency / Denominated Currency Quote / Ask The exchange rate of a currency is usually expressed as a quote and an ask price The quote is always lower than the ask price The quote represents the denominated currency obtained when the base currency is sold and the ask represents the denominated currency that must be paid to obtain the base currency The following price quote for EUR/USD is an example of the quote/ask representation: EUR/USD: 9726/9729 Example The first part (before the slash) is the quote (the dollar received when the euro is sold) In this example, the quote is .9726 The second part (after the slash) is used to obtain the ask. after the slash) is used to get the ask price (the euro that must be paid to buy dollars) in this example, the ask price is .9729 The difference between the offer price and the ask price is called the spread in the previous example, the spread is .0003 or 3 pips unlike EUR/USD, there are currency pairs that are quoted only to the 2nd decimal place (i.e. USD/JPY may be quoted at 119.45/48), in which case, 3 A spread of 3 pips, although a single pip may seem small, will translate into thousands of gains and losses in the interbank deposit market. When the volume is $1 million or more, the spread obtained in the quotation is typically 3 pips The smaller the volume, the larger the spread typically is For example, when the volume is less than $100,000, a spread of 50-200 pips is common for credit cards Companies typically use spreads of 200-300 pips Banks and exchange houses use spreads in the range of 200-1000 pips (in addition to commissions charged) For investors and speculators, a smaller or lesser spread will translate into easier profits due to exchange rate movements Buying and Selling All transactions result in the simultaneous purchase of one currency and sale of another ● Buying (long) currency pairs indicates the purchase of the first currency base currency and the sale of an equal amount of the second currency denominated currency (the base currency of payment) Due to short selling, there is no need to own the denominated currency before selling When a trader believes that the base currency will rise against the denominated currency, or equivalently, that the corresponding exchange rate will rise, the trader will buy the currency pair ● Sell (short) currency pair indicates the sale of the first currency base currency and the purchase of the A trader sells a currency pair when he believes that the base currency will fall relative to the denominated currency or, equivalently, that the denominated currency will rise relative to the base currency In an open trade or position, a trader either buys or sells a currency pair without selling or repurchasing a sufficient amount of the pair to effectively close the trade When a trader has an open trade or position, must profit or lose from the fluctuations in the price of the currency pair

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