The currency definition is: a country’s currency to be exchanged for currency from another country.When it comes to exchange, the term refers to the purchase of a currency by selling another currency.
For a complete notion of the currency definitionwe must take into account a number of factors:
1) The currencies are traded in pairs: EUR / USD - USD / JPY - GBP / USD and other currencies
2) The first currency in the pair is the base currency and the second is the quotation currency
3) The difference between the price of one currency over another is measured by PIP’s numbers
From the first point we can identify certain variables to determine the currency definition: one currency is compared / exchanged in the market with another currency of another country. Example: EUR / USD The transaction is between the euro currency of the European Union and the currency dollar, U.S.Then, the base currency is to be bought or sold.For example, if you want to buy EUR / USD you choose to buy euros and sell dollars.The dollar would be, in this case, the quotation currency, the benchmark currency for the transaction. We will completedeveloping the currency definition:
We will learn to analyze a table of quotations to complete to learn the concept of currency definition:
(Friday November 13, 2009)
Currency Bid Ask
EUR / USD 1.4919 1.4922
GBP / USD 1.6688 1.6692
USD / JPY 89,570 89,610
Trade Bid Ask
CRUDE OIL 76,680 76,740
GOLD 1114.15 1115.15
SILVER 17,280 17,330
Currency is a term known throughout the world and corresponds to the EUR (euro) and / or USD (U.S. Dollar) GBP (British pound) JPY (Japanese Yen) and so on.The merchandise is the price of goods and services most sought (required, higher value) as can be oil, gold and silver.
BID and ASK are the final concepts you must know to have the tools for implementing the currency definition.As an example we will use the EUR / USD.As a buyer sell 1 euro for 1.4919 U.S. dollars and buy the euro at 1.4922.The difference between the two prices is what is known as SPREAD and is what the institution gets as being responsible for the transaction.
An agent or responsible banking institutions in FOREX market “supply” (BID) the price at which a customer will buy the EUR. The agentBUY one euro to the lowest price:1.4919.The currency definition is completed when foreign exchange is completed to understand the whole circle.So, the agent bought to the BID (the lowest one) price and sell ASK with the highest price 1.49222.
The places where you can learn through practice the currency definition are known as foreign exchange brokers.Jc Lyons is one of the top brokers at present.Its trajectory is determined to give the client the best tools to make their operations more simple and direct.From Jc Lyons website you can download two different platforms: JC HIGHWAY for beginners (does not operate with real money) and JC HIGHWAY EXPERIENCE, where you can apply all the acquired knowledge and increase your financial capital.
