From our previous materials we already know what is foreign exchange trade (4x currency trading, forex exchange trading, foreign exchange forex), we understand what is foreign exchange market and know some essential information about the largest and most powerful markets.
In this article we are making a brief introduction to forex rates.
Normally we speak about forex rates when we are thinking about two currencies that to some extend are related, or corresponding. This is so called currency pair.
It’s not a secret that every currency pair has its own peculiarities, mostly determined by influence of central and commercial banks, general economical situation in the emitting countries. Traders often apply a so-called method of “currencies-allies”, somehow interconnected with some currency pair. This method is some kind of indicator: when one currency rate changes, the interconnected currency’s rate is changing too.
Rates of Euro relatively to US dollars is considered to be the most clear and expected. European sessions are normally stable and expected and to some extend they are said to balance the US dollars rates and the aggressive influence of the American financial institutions is therefore influences the markets less dramatic than it could be. Therefore the EUR/USD pair is not the way to get an extremely high revenue. Yet, it’s one of the best ways to avoid unnecessary risks. E.g. Asian currencies, especially in pair with US dollars, can bring you to dramatic losses, but if you are lucky, you can win a lot.
E.g. when we are dealing with the Japanese Yen, we can see the rate jump up and down +/- 100 or even 200 degrees, with no logical explanation.
Except the most common currencies pairs there are cross-rates: AUD/GBP, CAD/AUD, CHF/CAD and other, even more exotic ones. It’s evident that each pair is unique, and sometimes the unexpected currency pairs can be even more attractive to traders.
