Saturday, September 11, 2010

Forex currencies quotation system

Currencies are quoted in pairs, for example – EUR/USD or USD/JPY.
The first currency in the pair is called the base currency and the second is called the counter currency.
The base currency is the ‘basis’ for purchases and sales. For example, if you buy EUR/USD, then you acquire Euros and sell Dollars. You do this if you expect the Euro to grow against the Dollar.
It is also possible for a currency pair to be quoted as USD/EUR, but this method is used extremely rarely.
Each transaction must have 2 sides – a buy and a sell (or a sell and a buy).By this we mean that it is impossible to buy 100.000 EUR/USD and then exchange it for another currency pair (i.e.: EUR/JPY) without closing the first position.
Also please note that no physical currency delivery will be made. For these purposes banks and exchange companies, which specialize in low-rate currency conversions are available.

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