Forex currency pair

Forex currency pair - where do you get the currency?

The Forex Exchange, like any stock exchange, is about exchanging one thing over another for the best odds. Simply put - you buy cheaply, you sell expensive and vice versa. The Forex Exchange is a so-called two-sided market - you can earn on this market both at the rate of growth and at its downside.

How it's possible?

This is due to the market itself. Financial instruments (such as shares for the stock market) you are trading here are currency pairs such as EUR / USD, USD / JPY, EUR / GBP. Contrary to appearances it is not new - the prices you see in exchange offices are nothing but exchange rates EUR / PLN, USD / PLN etc.

If you for example - probably some people once thought about it - they looked at economic news and thought that the euro rate would grow for a few months, went to the counter and dollars from your savings exchanged for euros, then it would be nothing but a Forex trading.

When in fact the euro exchange rate will rise, then after these few months for your euros you will receive more dollars than you spent on buying euros earlier - the difference in their amount is your profit.

The Forex Exchange works just like this with the difference that similar transactions can be made every few minutes and continue to make money. This is because of the scale - you work on far less exchange rate changes than in exchange offices and you exchange far larger amounts of money, which you do not actually have to have, but about that later.

Like the stock market, you buy and sell stocks, so you buy and sell currency pairs here. Practically speaking, you buy one currency against the other, but at first you do not have to worry about it. So far, take a pair of currencies as a whole, which you might as well sell - if you think the course will go down or buy if you think the course will go up.

Forex: where is the currency exchange?

The currency course is one of the heaviest to understand things at the very beginning. In currency exchange we give the name of the currency and the number, and here we suddenly have two currencies (currency pair), and the digit one. As I mentioned earlier, the exchange rate is nothing more than the value of one currency to another. The first pair is the base currency, in relation to which the quota currency is set - the second pair.

Example:

Let's take a pair of GBP / JPY (British pound to Japanese Yen). The base currency is here the pound (first pair) and the yen quoted currency (second pair). The course of this pair answers the question: how many yen can we buy for one pound? The answer is today, 180.65, that is, if we lived in Japan and wanted to exchange our yen for pounds (or rounded) would display a billboard in the counter near the GBP sign.

A number of factors may influence the currency exchange rate. Generally speaking, this is the resultant battle between demand and supply for currency. The more people are exchanging dollars for euros, the more the exchange rate of the EUR / USD pair is rising because the euro is rising and the dollar is cheaper (the euro can be bought more and more dollars). Falls (for euro we can buy less and less dollars).