Currency Trading Pairs
The simultaneous process of buying of one currency and selling of another currency is carried out by the Foreign Exchange Traders, which demands Forex Quotes for such Currency pairs. One of the currencies, written on the left hand side, is called the base (or transaction) currency. The one written on the right hand side is called the Quote (or the counter) currency. An example can be cited in this regard. In the currency pair EUR/USD, the EUR forms the base currency and the USD forms the Quote Currency.
The price of a pair is written in the decimal form with four digits to the right and one digit to the left of the decimal point. The base currency is said to be getting stronger than the counter currency if the value of the quote moves from a lower value to a higher value. The opposite happens if the quote value shifts from a higher to a lower value. A trader in the long position makes profit if the price of a currency pair rises. But a trader in the short position loses out on money in case of price rise.
The Percentage In Point (PIP) is the smallest measure of price move made by the exchange rate in the Forex trading. The USD/JPY is an exception with regard to each PIP being 0.01, which in other cases one PIP, equals 0.0001.
The price at which a Broker is ready to sell a currency pair is the same as the price at which the Trader is ready to pay for the same, is called the ask price. The bid price is the one for which the Broker will buy and the Trader will sell the currency pair.
The difference between the Bid price and the Ask price is called a Spread, which expressed in terms of PIP. A Cross Rate currency pair does not include USD or EUR. Pairs involving EUR are called Euro Crosses.
Any kind of transaction demands a deposit to be kept by the Trader. The ratio of the contract value to the deposit is known as Leverage. The prerequisite of the opening of a position is an initial investment, Margin, which covers the credit risk that a broker is vulnerable to. The percentage margin requirement can be calculated as the inverse of Leverage value.
The Majors, defined as the most liquid and internationally traded currency pair, are an integral part of the Forex Trading, accounting for its 90%. The most important currency pairs are the EUR/USD ranking 1st, USD/JPY ranking 2nd, GBP/USD ranking 3rd and lastly EUR/JPY ranking 4th among all the actively traded currency pairs.
It is to be borne in mind that the Forex trading involves a high level of substantial risk to the capital. As a result of this, you might end up losing on more money than the amount you had invested. You are then advised to go - 23199
The price of a pair is written in the decimal form with four digits to the right and one digit to the left of the decimal point. The base currency is said to be getting stronger than the counter currency if the value of the quote moves from a lower value to a higher value. The opposite happens if the quote value shifts from a higher to a lower value. A trader in the long position makes profit if the price of a currency pair rises. But a trader in the short position loses out on money in case of price rise.
The Percentage In Point (PIP) is the smallest measure of price move made by the exchange rate in the Forex trading. The USD/JPY is an exception with regard to each PIP being 0.01, which in other cases one PIP, equals 0.0001.
The price at which a Broker is ready to sell a currency pair is the same as the price at which the Trader is ready to pay for the same, is called the ask price. The bid price is the one for which the Broker will buy and the Trader will sell the currency pair.
The difference between the Bid price and the Ask price is called a Spread, which expressed in terms of PIP. A Cross Rate currency pair does not include USD or EUR. Pairs involving EUR are called Euro Crosses.
Any kind of transaction demands a deposit to be kept by the Trader. The ratio of the contract value to the deposit is known as Leverage. The prerequisite of the opening of a position is an initial investment, Margin, which covers the credit risk that a broker is vulnerable to. The percentage margin requirement can be calculated as the inverse of Leverage value.
The Majors, defined as the most liquid and internationally traded currency pair, are an integral part of the Forex Trading, accounting for its 90%. The most important currency pairs are the EUR/USD ranking 1st, USD/JPY ranking 2nd, GBP/USD ranking 3rd and lastly EUR/JPY ranking 4th among all the actively traded currency pairs.
It is to be borne in mind that the Forex trading involves a high level of substantial risk to the capital. As a result of this, you might end up losing on more money than the amount you had invested. You are then advised to go - 23199
About the Author:
If you are looking for the best currency trading knowledge and information and want to know more about trading currencies please visit: Currency Pairs
posted by X - Men @ 7:18 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home