Wednesday, November 23, 2016

A currency pair

A currency pair (Currency Pair)

All operations in the forex market is usually written with the help of the currency pairs, such an approach can significantly simplify the external perception and at the same time to reduce the record itself.

The currency pair (Currency Pair) - skrashennaya record relationships rates of the two currencies, a special letter ISO code consists of three letters used in the recording. Typically, this record is made in the form AUDCAD or AUD / CAD, both versions are correct.

This approach reduces the recording of quotations and is easier for quick perception of the trader or bank employee.

A currency pair consists of two currencies, one of which is a base, and the other plays the role of the quote, for example, in the pair USD / JPY US dollar / Japanese yen, the US dollar is the base currency and the yen quoted.

In addition, each pair has a few basic indicators:

• quotes course - can be defined as one indicator, and two, if you talk about the rate of the Central Bank it is a single value. The same is the case if a commercial rate of a particular currency pair already used purchases and sales figures.

For example, the Central Bank today set the dollar-ruble exchange rate USD / RUB at the level of 30.00 rubles for one dollar, in the same case when it comes to forex exchange, you already will see the message - USD / RUB Bid 29,00 Ask 31,00 of this record can be judged that the US dollar buying at 29.00 rubles, and sold at 31.00 rubles, the difference between the two rates is called the spread.

• Spread - the difference between buying and selling of base currency in a currency pair, usually the commission broker in currency exchange transactions (bank or broker).

• Direct or reverse - if the currency pair USD / RUB is a direct quotation, which shows how many rubles give for a dollar, then everything is clear, but sometimes you want to express, and an inverse relationship, how many dollars are available for one ruble, in this case, a reverse quotation RUB / USD (in practice, such a record is not commonly used).

The underlying asset in a currency pair can act as a tool and as precious metals, in this case, you come across a recording XAU / USD, XAG / USD, where in the first case shows the ratio of gold to the US dollar, while the second silver.

Currency pairs are a universal tool that is not only used when trading in the forex market but also on other currency markets.

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