The Second Step to Get a Big Leap for Trading

There are several characteristics of the exchange rate should be known. The presentation of forex is different from other financial markets.

1. The price of the exchange rate should be displayed in five digits.

For example

EUR 0.9705

Japanese Yen JPY 119.95

British Pound GBP 1.5237

Swiss Franc CHF 1.5003

2. The minimum change unit is one basic point, which is the change unit of the last digit.

EUR 0.0001

Japanese Yen JPY 0.01

British Pound GBP 0.0001

Swiss franc CHF 0.0001

3. Use “dots” to describe the ups and downs

According to market practices, the prices of forex rates are usually composed of five significant figures. Counting from the right to the left, the first one on the right side is called “X point”, which is the smallest unit of change in the exchange rate, while the second is called “X-ten points”, and so on.

For example: 1 Euro=1.1011 USD; 1 USD=120.55 Japanese Yen

If the euro against the Dollar changes from 1.1010 to 1.1015, it means the euro rises by 5 points against the Dollar.

If the Dollar against the Yen change from 120.50 to 120.00, it means the Dollar falls 50 points against the Yen.

Exchange rate presentation

The direct pricing method is a way of expressing the exchange rate of a certain unit of foreign currency against the domestic currency.Generally, it is how much domestic currency can be converted into 1 unit or 100 units of foreign currency. At present, most countries in the world, including South Africa, have adopted the direct pricing method. For example, the ratio of USD to ZAR is 1:15.4324.

The indirect pricing method is a way of expressing the exchange rate of a certain unit of the domestic currency against a foreign currency.Generally, it is how much foreign currency can be converted into 1 unit or 100 units of the domestic currency. At present, only a few countries in the world use the indirect pricing method, such as the British, the EU, Australia, New Zealand, and Irish. For example, for the United Kingdom, the pound to ZAR exchange rate is 1:20.4471, which is calculated by the indirect pricing method.

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