Many traders who begin with currency exchange are looking to make a profit from major currencies. An understanding of the relationship between two currencies helps to set expectations for profit and loss during a trade.
First, it becomes important to understand the dynamics of the pair- which currency is base and which counters.
The numbers make sense only after having set the correct relation. For instance the USD is almost always a 'base' currency. But, the GBP is a counter.
Next, a look at the exchange rate between the two is important.
There are basically three types of exchanged rates- fixed, adjustable, or floating.
After you put it all together, you will understand the importance of the currency market.
First, it becomes important to understand the dynamics of the pair- which currency is base and which counters.
The numbers make sense only after having set the correct relation. For instance the USD is almost always a 'base' currency. But, the GBP is a counter.
Next, a look at the exchange rate between the two is important.
There are basically three types of exchanged rates- fixed, adjustable, or floating.
After you put it all together, you will understand the importance of the currency market.
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