Posted on 31 March 2011
Tags: accounting currency, amount of quote, ask price, Australian dollar, base currency, base currency value, bid price, British pound, Business, CAD, Canadian dollar, Canadian dollars, chf, counter currency, currencies, currencies of different countries, currency pair, dollar eur, domestic currency, eternity, EUR/GBP, EUR/USD, exchange rate, exchange trading, expectation, Foreign, foreign currency, foreign exchange, foreign exchange trading, forex currency, GBP/USD, individuals, IRS, Japanese, Japanese yen, liquidity, make money, market currency, monetary unit, Pip, quote currency, second currency, secondary currency, single unit, Swiss franc, trader, Trading, trading currencies, Trading Market, tradingcurrency pairs, transactions, understanding, understanding forex, US Dollar, USD/CAD
The actual meaning of the Foreign Exchange trading is to trade in currencies of different countries globally. This business is coming out as the biggest market with minimum regulations. It also offers the maximum liquidity to the individuals who invest in this market.
Currency Pairs
The trading business in this market is always performed in terms of pairs, i.e. Currency Pairs. It means that simultaneous buying of one currency and selling of the other one. The exchange rate exists, if we join both these operations; the buying and selling rate.
For instance, you may possibly purchase GBP with Dollars with the expectation that GBP price will increase as compare to that of Dollar. Hence, if the value of British Pound increases in comparison to Dollar, you may sell the position; you therefore, make money in this trading.
The Major Trading Currencies
The major trading currencies in the Foreign Exchange trading market are USD (US Dollar), EUR (Euro), Australian Dollar (AUD), Japanese Yen (JPY), Great British Pound (GBP), Swiss France (CHF) and Canadian Dollar (CAD).
The Main Traded Currency Pairs
In this regard the frequently traded currency pairs are:
- US Dollar and Great British Pound (USD/GBP)
- Japanese Yen and US Dollar (JPY/USD)
- US Dollar and Euro (USD/EUR)
- Swiss Franc and US Dollar (CHF/USD)
In order to quote the currency pairs, the first currency is known as the base currency whereas the second currency is referred as quote currency of counter currency. The base currency is identical to one monetary unit of exchange for the eternity, like one Euro, one Dollar, one Pound, etc.
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Posted on 01 August 2009
Tags: accounting currency, base currency, counter currency, Currency Hierarchy, currency pair, Currency Rates, domestic currency, exchange rates, first currency, first precedence for base currency, foreign exchange markets, FX market, FX market convention, majors, mathematical convention, minors, quote currency, second currency, terms currency, US Dollars
In foreign exchange markets, the first currency in a currency pair is the base currency. Whereas the second currency is referred to as the quote currency which is also called as counter currency, terms currency. Exchange rates are quoted in per unit of the base currency. The thing that should be noted is that FX market convention is the reverse of mathematical convention.
Currently for base currency, the euro has first precedence; as a result of this all currency pairs involving it should have the euro as the first currency. For instance, the exchange rate will be identified as EUR/USD between the US dollar and the euro; the number shows the amount of US dollars that can be traded for one euro.
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