How to Trade Forex - Exchange Rate

8
Jul

What is the exchange rate

In the world of finance the rate at which one currency is valued against another is known as the exchange rate, also known as the foreign exchange rate, Forex rate or spot. The exchange rates are governed by the foreign exchange market; a market that is open to different types of buyers and sellers.

As it is a global market place, currency, trading occurs 24 hours a day, 5 days a week, opening at 20.15 GMT on Sunday and closing at 22.00 GMT on Friday.

The spot exchange rate is the real time current rate, or live price. Whereas the forward exchange rate refers to a price that is quoted and traded today, but is due for delivery and payment on a pre-determined future date.

In the retail currency exchange market the buying rate quoted by dealers will be different from the selling rate. the rates quoted will normally incorporate a profit for the dealer, often referred to as the spread; otherwise the charge for brokering the trade could be recovered by way of a commission.

 

Exchange Rate Examples

If the chart moves upwards then the base currency moves up.

 

Chart of GBP against USD showing GBP strengthening

 

 

 

 

 

  

 

If the Chat moves down then the base currency moves down.

 

Chat of the GBP against USD showing GBP weakening.

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