Learning Forex

Forex - Foreign Exchange - FX

In Forex trading the clients are speculating on the exchange rate between two currencies. The exchange rate measures the relative value of a currency. Meaning it measures how much currency is worth in terms of another currency.

Forex Basic Learning
Lets suppose the exchange rate for the GBP/USD (Great British Pound/United DStates Dollar) is 1.8675.
This means that 1 British Pound (First Currency in the pair, also known as the base currency) is equivalent of 1.8675 US dollar (Second member of the pair, known as the counter currency)
This is the standard quoting convention for exchange rates. The exchange rate represents how much 1 unit of the base currency (first currency in the pair) can purchase of the counter currency (second currency in the pair)

So if the GBP/USD exchange rate were to rise from 1.8675 to 1.8775, that mean 1 GBP would have gone from being to purchase 1.8675 US dollar to being able to purchase 1.8755 US dollar

Forex Summary Keys:

• Base currency is the term for the first currency in the pair
• Counter currency is the term for the second currency in the pair
• Exchange rate represents the number of units of the counter currency that one unit of the base currency can purchase