Currency Trading Pairs
The Foreign Exchange traders buy one and sell another currency simultaneously. This leads to expressing the Forex quotes in currency pairs. EUR/USD, USD/CHF, GBP/USD and USD/JPY are the four most important currency pairs. The former currency in the pair is called the base currency whereas the latter is called the quote (or counter) currency.
A five digit number is allotted as the price of the currency pair, having four digits to the right of the decimal point. A trader can opt for two kinds of positions, a short position or a long position. The difference lies in the fact that in case of sudden price rise of a particular currency price, the traders position, which is a long position (buying the 1st currency against the 2nd one), will appreciate, while the traders position, which is a short position (selling the 1st currency against the 2nd currency), depreciates for the same rise in currency pair price.
The price movements shown by the Exchange Rate in the Forex Trading are measured by the Percentage In Point (pip). Generally all the pairs show a pip equal to 0.0001. But the USD/JPY shows and exceptional pip equal to 0.01.
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.
A Trader needs to deposit a certain amount during any kind of transaction. Leverage is the ratio between contract value and deposit. The initial investment, called Margin, covers the credit risk of the broker, while opening a position. The percentage margin requirement equals the inverse of the leverage value.
Majors, which are traded worldwide, form the most liquid currency pairs. Their transaction accounts for about 90% of Forex Trading. The EUR/USD and the USD/JPY form the most important currency pairs of all that are traded actively. The GBP/USD currency pair is ranked 3rd, followed by the EUR/JPY, ranked 4th.
You are advised to check out all the terms and conditions subjected to market risk and the Risk Warning Notices, as there is high level of risk associated with your capital investments as a consequence of which you may lose out on money, more than you had invested. This will help you in judging whether you are a trader suitable to carry out such transactions. - 23217
A five digit number is allotted as the price of the currency pair, having four digits to the right of the decimal point. A trader can opt for two kinds of positions, a short position or a long position. The difference lies in the fact that in case of sudden price rise of a particular currency price, the traders position, which is a long position (buying the 1st currency against the 2nd one), will appreciate, while the traders position, which is a short position (selling the 1st currency against the 2nd currency), depreciates for the same rise in currency pair price.
The price movements shown by the Exchange Rate in the Forex Trading are measured by the Percentage In Point (pip). Generally all the pairs show a pip equal to 0.0001. But the USD/JPY shows and exceptional pip equal to 0.01.
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.
A Trader needs to deposit a certain amount during any kind of transaction. Leverage is the ratio between contract value and deposit. The initial investment, called Margin, covers the credit risk of the broker, while opening a position. The percentage margin requirement equals the inverse of the leverage value.
Majors, which are traded worldwide, form the most liquid currency pairs. Their transaction accounts for about 90% of Forex Trading. The EUR/USD and the USD/JPY form the most important currency pairs of all that are traded actively. The GBP/USD currency pair is ranked 3rd, followed by the EUR/JPY, ranked 4th.
You are advised to check out all the terms and conditions subjected to market risk and the Risk Warning Notices, as there is high level of risk associated with your capital investments as a consequence of which you may lose out on money, more than you had invested. This will help you in judging whether you are a trader suitable to carry out such transactions. - 23217
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Want to become a successful trader? In that case your first port of call should be at Forex Currency Pairs for all the training you need to become an expert.
posted by X - Men @ 7:16 AM
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