The Currencies Exchange Rate has many names. For example the “foreign exchange rate”- Forex rate FX rate and so on. Ultimately, no matter what name it goes under, the Currencies Exchange Rate refers to one thing: the exchange rate between two currencies.
You have probably asked yourself many questions about the Currencies Exchange Rate. How do I read a Currencies Exchange Rate quotation? Which is the Base currency and which is the Term currency? Why the Currencies Exchange Rate fluctuates? We will answer these questions for you in the following paragraphs.
How do I read a Currencies Exchange Rate quotation? The quotation is given by stating the number of units of “term currency” or “price currency” that can be bought in terms of 1 unit “base currency”. That is in a quotation that reads EUR/USD 1.5 (i.e. 1.5 USD per EUR), the “term currency” is USD and the “base currency” is EUR.
Which is the Base currency and which is the Term currency? To determine this there is a market convention. The order is: EUR > GBP > AUD > USD. Thus if you are converting from EUR into AUD, EUR is the Base currency, AUD is the Term currency. This exchange rate tells you how many Australian dollars you would pay or receive for 1 Euro. There are some exceptions to this rule; one example is in Japan, which always quotes its currency as the base to other currencies.
Why the Currencies Exchange Rate fluctuates? The exchange rate is market based and prices will change whenever the values of either one of the two component currencies change. More importantly a currency will appreciate whenever demand for it will increase beyond available supply.
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Forex, FX, or Foreign Exchange, is the simultaneous exchange of one country’s currency for that of another. FOREXYARD offers a leading online trading platform for individuals that desire to profit from the exchange rate between two currencies. To accomplish this inventors buy or sell one currency for another, with the hope of profiting when the value of the currencies changes their favor as a result of local events around the globe. The Forex Exchange has more daily volume – total transactions- than any other market in the world.
In the FX market you can buy or sell different currencies. When you buy a currency, you are said to be going “long”. And when you sell a currency, you are said to be going “short”. As the value of one currency rises or falls relative to it complementary, traders decide to buy or sell currency pairs in order to gain a profit. Placing a trade in the foreign exchange market is simple and the mechanics of a trade are virtually identical to those found in other public markets.
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In the finance world leverage has many different meanings. But the basic idea is to use a small sum of money you hold to acquire a greater amount of money (usually in the form of a loan). ForexYard offers its clients leverage up to 1:200. For example, let’s say you have recently opened a live account, and deposited the sum of $10,000. Using leverage, it will be possible for you to open new positions at the amount of $2,000,000! The first thing that might cross your mind is that you can profit 200 fold your deposit. Yet you should be aware that this 200 fold as well means you can lose your deposit just as rapidly. This is why Forexyard does not recommend using leverage higher than 10 times your balance. Using leverage exaggerates both gains and losses, even when market conditions are relatively calm. In the case where a trader surpasses the maximum leverage permitted (this happens when account equity shrinks as a result of trading losses), the trading system will close all effected positions in the account. This safeguard prevents a client’s account from falling into a negative balance, even in the highly volatile and fast moving forex market.
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