2013년 11월 30일 토요일

About 'forex exchange rate in'|...investment increases or decreases because of changes in the currency exchange rate or Forex rate. These changes can occur at any time, and often result from...







About 'forex exchange rate in'|...investment increases or decreases because of changes in the currency exchange rate or Forex rate. These changes can occur at any time, and often result from...








What               is               Forex               and               How               Does               It               Work?

So               what               exactly               is               FOREX?
               FOREX               is               bit               different               from               other               captive               markets,               FOREX               full               form               is               FOREIGN               EXCHANGE.
               Its               relative               value               of               one               currency               versus               another,               to               explain               in               pretty               simple               language               it's               always               good               to               go               with               a               case               study.
               Let's               talk               about               a               case               of               study               of               vacation               to               explain               FOREX               in               simple               terms,
               Let's               imagine               that               you               stay               in               United               States               and               planning               to               go               for               a               vacation               to               Switzerland,               that               means               you               have               to               convert               your               spending               money               right?

That               means               you               will               be               converting               US               dollars               to               Switzerland               Franc               (CHF)
               That               is               USD               /               CHF;               this               is               what               we               call               as               Currency               Pair               in               FOREX               language.

This               indicates               US               dollar               compare               to               Franc.
               So               now               let's               see               what               the               exchange               rate               of               dollar               to               franc               is,               let's               say               for               example               it               is               1.2049               so               that               means               it               costs               1.2049               francs               to               buy               a               dollar.

So               for               your               vacation               let's               think               that               you               would               like               to               spend               $500               so               that's               going               to               give               us               602               francs               as               per               the               above               mentioned               exchange               rate.

So               with               this               we               have               done               our               first               foreign               exchange,               you               have               exchanged               your               domestic               currency               to               a               different               foreign               currency.

This               completes               one               half               of               foreign               exchange               transaction.
               Now               let's               assume               that               you               are               planning               to               go               back               to               US               from               Switzerland               as               you               completed               your               vacation               and               you               didn't               spend               the               exchanged               money               of               602               francs               and               you               still               have               that               amount               in               your               wallet               and               now               we               you               need               to               exchange               that               amount               to               dollars,               this               time               let's               assume               that               currency               exchange               rate               is               1.1000.

If               you               compare               between               previous               exchange               rate               and               the               second               rate               actually               the               rate               has               been               dropped               but               in               this               case               it               works               in               your               favor.
               That               is               because               in               earlier               case               you               require               1.2049               francs               to               buy               a               dollar               but               now               only               1.1000               francs               are               enough.

That               means               if               you               have               exchanged               602               francs               in               return               you               receive               $547               which               actually               left               you               with               profit,               that's               the               great               news               right!!!

So               what               actually               happened               here               was               your               initial               exchanged               amount               acted               as               your               asset               and               appreciated               the               value               and               resulted               in               profit.
               Well               this               may               not               be               true               in               all               the               cases,               you               may               also               receive               less               than               your               actual               amount               due               to               depreciation               and               may               leave               you               in               loss,               and               this               is               all               about               FOREX               and               how               it               works.






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