First of all let’s look at the definition of the term — currency rate. Currency rate is a price of a unit of a national currency, expressed in monetary units of another country at transactions of buy and sale. This price can be established based on the ratio of demand and supply of a certain currency in the conditions of the free market, or this price is strictly regulated by the resolution of a government or its financial authority, usually this is a central bank.

Types of currency rates.
1. Direct quotations.
In the majority of the world countries currency rates are expressed in a national countries. This system has a name of direct quotations. For example, in Japan one US dollar will be equated with a certain number of Japanese yens (JPY) and in New-York one Japanese yen will be equated with a certain number of cents (or dollars). A direct quotation is the quotation that shows what number of a national currency contains in one US dollar.

The quotation USD/JPY – 120.56 means that one US dollar is equal to 120,56 JPY, USD/CHF – 1.5530.

2. Indirect quotations.
The United Kingdom is one of not many countries that uses the system of indirect quotations. An indirect quotation is the quotation that shows what number of US dollars a national currency contains.
The quotation GBP/USD – 1.5855 means that one British pound sterling is equal to 1.5855 US dollar, EUR/USD – 1.0343.

3. Cross rates.
This is a correlation between two national currencies, that comes from their rate regarding to a rate of the third currency. At operations on the world market cross rates with the US dollar are often used, as the US dollar is not only the basic reserve currency, but it is also the currency of transaction in the majority of currency operations.
All the calculations on cross rates, which are connected with US dollar, are calculated by multiplication EUR/CHF = USD/CHF X EUR/USD.
All the calculations on cross rates, which are connected with GBP, are calculated by division GBP/EUR = GBP/USD : EUR/USD

4. A spot rate.
A price of one national currency expressed in another national currency, that is put at the moment of arranging a transaction, on condition that the currencies will be exchanged by banks contractors on the second working day from the day of the transaction. A spot rate shows how much a national currency is valued at the moment of holding the operation outside the given county.

The major currencies of the Forex market:

EUR — Euro, the international Europen currency.
USD — American dollar (buck, greenbuck).
AUD — Australian dollar (aussie)
NZD — New-Zealand dollar (kiwi)
GBP — Great Britain pound (cable)
CHF — Swiss frank (swissie)
JPY — Japanese yen

There are 2 ways you can make money on Forex market.

You can learn the basics of trading currencies on Forex with the help of a good forex book and do the forex trading yourself.

Alternatively, you can hire experienced traders to manage the money on your trading account and they will trade for you. Find out more about forex investment.