What are the different types of Forex Rates

What are the different types of Forex Rates

The exchange rate is probably the highest rate that operators need to know about the forex market. However, there are several different exchange rates they should look in forex trading. Forex Trading Forex rates in different

To make well-informed business decisions, traders should ideally know the exchange rates as follows:

Exchange rate: Among the different exchange rates, the exchange rate between any two currencies is the easiest to calculate. All you need is to get the latest prices of the two currencies on the forex market. This rate is the actual price you pay according to the first currency for the second currency. For example, if the EUR / CHF trades at 1.3271, which means that 1 euro is priced at 1.3271 CHF.

Pip Value: PIP "means the percentage point. A pip is the smallest possible movement of a gradual change can do. The value of a pip can be different in different markets. For the pair EUR / USD currency, an increase of 0.8994 to 0.8995 is a pip. In this case, a pip is 0.0001.

Spread: The difference between bid and ask prices. For example, if the bid price of the EUR / AUD is 1.3639 and the ask price is 1.3647, the spread would be from 1.3647 to 1.3639 or 0.0008.Many Forex brokers earn profits from the spread in a pair of currencies, rather than charge fees.

Rollover Rate: In a transaction, the difference between interest rates of the two currencies is the rate of turnover. It is debited or credited to the account of a trader when he / she holds positions overnight. For example, if the interest rate on the pound is 1% and the Swiss franc is 0.25%, the difference in the interest rate is 0.75%. If you hold a long position on GBP / CHF, you earn is the interest bearing and holding a short position, you will pay interest to reflect different.

Leverage and Margin: In the forex market, leverage is the ability through which traders can use their forex account in a greater position in their margin account. On the other hand, the margin is the deposit made to open or maintain a position. The margin requirement increases with increasing leverage a trader uses.Margin requirements may vary for different brokers. However, operators can calculate the minimum requirement.

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