Reading quotes

The rates are usually expressed as five-digit numbers. For example, USDJPY = 121.44 means that 1 US dollar is valued at 121.44 Japanese yens (i.e. they are willing to pay you that many yens for one US dollar while you are buying or selling). At the same time, GBPUSD = 1.6262 means that 1 British pound is valued at 1.6262 US dollars. Generally, if the rate XXXYYY = Z, it means that one unit of XXX is worth Z units of YYY.

An example for the exchange rates

Forex exchange rates

Forex exchange rate represents the relation of two currencies' values towards each other. It generally shows what amount of one currency is required to purchase one unit of another. Better understanding of this thing will let you start easier at Forex.

Most currencies on Forex are traded against the US dollar (USD). Four other most-traded currencies are: EUR (the euro), JPY (the Japanese yen), GBP (the British pound sterling), CHF (the Swiss franc). Sometimes AUD (the Australian dollar) is also included into this group of currencies called "the Majors" (because they form the majority of the currencies traded in Forex).

Forex

Forex is an interbank market that was created in 1971 when international trade transitioned from fixed to floating exchange rates. Since then the rates of currencies relative to each other are determined by the most obvious means which is the exchange at a mutually agreed rate.

This market surpasses the others in its volume. For example, the daily turnover of world securities market is estimated at $300 billion, while Forex approaches 1 to 3 TRILLION US dollars in the same amount of time.

However, Forex is not a market in a traditional sense. It doesn't have a fixed location of the trading floor as, for example, futures market does. The trading is done over the telephone and at the computer terminals in hundreds of banks around the world simultaneously.

Futures and securities markets have one more significant feature distinguishing them from Forex, and at the same time restricting them. The trading is suspended at the end of each day and resumed only next morning. Thus, should certain significant developments occur in the USA, the opening of Russian market next morning could quite surprise you, if you're trading there.

Forex is open 24 hours a day, and the currency exchange operations are maintained throughout working days of the week. Almost every time zone (London, New York, Tokyo, Hong Kong, Sydney) has dealers willing to quote currencies.