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Saturday, July 23, 2011

Understanding The Rates of Foreign Currency

Understanding exchange rates for currency trading is not difficult, but can be a bit confusing. By understanding the language of the Forex market makes it easier to understand rates, and spaghetti to unravel. In some places, Foreign Exchange often termed valutakurs.
Basic operation of the exchange rate
The exchange rates for currency trading actually born from a simple formula. For example, one euro is worth $ 1.34, but $ 1 is worth € 0.75. Because trading is bidirectional, so the proportions. One mile equals 1.6 kilometers, but is only 1 kilometer equals 0.6 miles.
How I can read graphs of trade exchange
Forex markets use charts that a basic framework for trade in foreign currency, the first column is the country code, a three-letter code that designates the currency. For example, the U.S. dollar U.S. dollars, while the Canadian dollar has a code of CAD. The second column in a chart of currency trading is the name of foreign country and currency. The remaining columns each reflects comparisons between the base currency desired and other currencies. This type of trade in the graphical analysis of the fundamental foreign currency rates for a particular currency against other world currencies.
Graphical example traded currency
Sometimes a visual can help make a clearer explanation, consider the table shown below:
Country Code Units / USD USD / Unit Units / CAD CAD / Unit
ARP Argentina (Pesos) 2.1561 0.3396 2.9450 0.4638
AUD Australia (Dollar) 1.1132 0.6577 1.5205 0.8983
BSD Bahamas (Dollar) 0.7321 1.0000 1.0000 1.3659
BRL Brazil (Real) 2.9149 2.1340 0.3431 0.4686
CAD Canada (Dollar) 1.0000 0.7321 1.3659 1.0000
In Dansk, I usually use the dansk valutaberegner.
This example serves to show how the graph and the relationship between various currencies. For example, looking at the row for the Canadian dollar, foreign currency trading chart shows the dollar is worth $ 1.37 Canadian, a CAD is worth $ 0.73, and just to be safe EUR CAD is equal to one.
In search of arbitrage currency trading
Arbitrage is the investment strategy of multi-currency operations with the intention of profiting from any differences in exchange rates. For example, let’s trade, CAD and ARP. Finally, when we sell dollars and buy U.S. dollars we have 5.00. If the time of investment is right and take the volatility between pairs, arbitration has the potential to be very profitable
Conclusion
Currency trading  can be moments of confusion, the web of a plate of spaghetti. Once you learn Forex trading, foreign concepts like trading cards very clear!

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