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Foreign exchange is the most liquid sector of financial markets. The daily trading volume reaches five billion dollars. For many traders from all over the world, Forex Currency quotes are of great importance, as they reflect current market conditions, determine trends and affect the final profit from currency trading.
In the Forex market, there is such a thing as a currency pair. It is the subject of trading on the growth of decline. A currency pair quote is calculated from the cost of converting one currency to another.
For example: when quoting a currency pair of EUR / USD 1.1000, you must have 1100 US dollars to convert to 1000 Euros.
As you know, the US dollar is the world's reserve currency. In addition to USD, six major currencies have the largest trading volume on the international currency exchange:
Thus, there are six major currency pairs on Forex. The total value of a volume-weighted basket of six major currencies versus the US dollar determines the value of the so-called dollar index (DXY).
All other currency pairs expressed through USD are considered exotic since they have a significantly lower volume of trading operations. Besides, there is a large list of so-called cross-courses. If you need to convert British pounds to Euros, you can use the EUR/GBP cross rate, which is formed from the two main currency pairs EUR/USD and GBP/USD. Absolutely all cross rates are calculated based on the current exchange rate of the US dollar to both currencies in a pair. That is, to convert Japanese yen to Canadian dollars, you must first use the USD/JPY quote, and only then calculate the USD/CAD conversion. Forex currency quotes include basic and exotic currency pairs, as well as cross rates.
As currency rates change every second, real-time Forex quotes determine the current state of trading accounts, affect the profitability of trading positions and display trends. Therefore, traders need to keep abreast of the market and monitor periodic fluctuations in rates. It is important to be aware of changes in quotes in percentage and points, as strong fluctuations can indicate an increase in the volatility and profitability of the trade. A positive change in the quotation of a currency pair indicates a bull market, while a negative indicator will be in the case of a bear market. There are also cases of price dynamics reversal when the initial growth of quotations is replaced by a decline or vice versa.
Forex currency quotes are usually represented by value with five decimal places. In this case, one point is the minimum change in the quotation in the fourth decimal place. But there are exceptions.
For example: currency pair EUR/JPY (120.435) has only three decimal places, while the second decimal place is considered one point. The value of a point depends on factors such as leverage, the volume of the trading position and the current exchange rate.