Exchange Rates
Just as in other trade instruments, the forex transaction prices stated in the bid price ( 'BID') and demand ( 'ASK'). Price quote ( 'BID') is the price level where a trader can sell the currency, instead asking price ( 'ASK') is the price level where a trader can buy currencies.
An easy way to remember: 'bid' or the price of 'sale' is always lower than the 'Ask' or price 'buy', in other words a forex trader always buys at a price higher than the selling price. The difference between purchase price and the selling price is called the 'spread' is none other than the transaction costs to be paid by a trader.
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For a beginner, read the currency pairs at first seemed a little confusing. But it is actually quite easy if you remember two things:
1. The currency was first mentioned base currency.
2. The value base currency is always 1 (one).
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So let's say the exchange rate of currency pairs USD / JPY 121.76 value it means that 1 U.S. Dollar (USD) is worth 121.76 yen (JPY). If the exchange rate USD / JPY moved up to the mean value of 121.92 U.S. Dollar, Japanese Yen rises as compared to 1 U.S. Dollar is now worth 121.92 yen. Or conversely, the currency fell against the yen today as U.S. Dollar to buy 1 U.S. Dollar Japanese Yen takes the value greater.
Of all the currency pairs of U.S. Dollar, there are four currency pairs where the U.S. Dollar is not the base currency. These four currency pairs are GBP / USD, EUR / USD, AUD / USD, and NZD / USD. If the specified exchange rate GBP / USD is 1.9864 means that 1 British Pound is worth 1.9864 U.S. Dollar. If the value of GBP / USD rose to 1.9918 so happened pound sterling currency strengthened against the U.S. dollar, or vice versa U.S. Dollar is weakening against the pound sterling. So to keep in mind, if the currency pair to rise or fall in value so that is strengthened or weakened the base currency.
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