Exchange rates are the relationship between the value of one currency and another. For example, if we have EUR / USD, the exchange rate indicates which price will have one euro in dollars.
Currencies are always in pairs, never taken separately, (EUR / USD, EUR / GBP, USD / JPY). This happens because in the Forex market there is a simultaneous purchase of one currency for another sale.
The best way to buy and sell currencies
There are always such amateur questions: “Where can I exchange currency?” or “ Is there a currency exchange location near me?” We must understand that we are trading not just buying or selling the foreign currency that we have. The best way to speculate about currencies online is to use a Forex broker or online mediator specifically in this sector. This broker works according to the wishes of traders through a trading platform that allows you to enter orders for purchase and sale from home. To start buying / selling currencies online, the first thing you have to do is create an account with a broker and after making the first deposit, you will be able to trade on the Forex market.
You must know that you have access to the trading platform used by the broker, you can see all the graphics and characteristics of your account.
The exchange rate tells us how many units of currency you have to buy to sell units of the base currency.
The base currency is taken as a reference in the buying and selling of operations. On the market, EUR / USD means the base currency (EUR) is bought together with the currency (quoted) sold. Usually a currency is bought when it is believed that there may be an appreciation of the currency from time to time.
Doubts about Offers and Requests
To be able to operate without errors in Forex, it is very important to be clear about the meaning of the Bid and Ask, to avoid confusion in terms of trading on Forex and trading with real money.
We can define these two concepts as:
Bid: is the selling price of the currency.
Ask: is the price of purchasing a currency.
Spread: is the difference between Bid and Ask.
We know that currency markets move differently from other markets such as the stock market.
On the foreign exchange market, we are not looking to speculate on the price of an asset, but look for courses and the history of a currency pair to decide where to buy and sell what exchange currency is traded.
Exchange rates are those who put differences and prices on currency pairs or other. For example, EUR / USD in this pair the euro exchange rate will be expressed in US dollars. If the value is 1.6 pips, that means one euro is equivalent to 1.6 dollars.
Example to understand the purchase / sale of currencies
If our broker decides to make a purchase position in the EUR / USD at 1.5 pip for € 100 using a leverage level of 1: 200. At the moment you decide to sell your currency pair, imagine that it has risen to 1.6
pip, so this operation would give you a profit of € 200. Because when operating with leverage, your level of investment and in this case profit is higher.
Regarding the demand for currencies, we can say that it is carried out simultaneously with the offer, that is, it is possibleto buy and sell currencies at the same time, it is an advantage since it is one of the largest markets in the world. The majority of operations of buying andselling currencies occur in the most liquid and volatile currency pairs.