When buying or selling a currency pair, each pair has its own Bid/Ask rate, for
example:
|
Pair |
Bid |
Ask |
|
EUR/USD |
1.5767 |
1.5769 |
|
GBP/USD |
1.9780 |
1.9782 |
|
USD/JPY |
103.23 |
103.25 |
|
AUD/USD |
0.9613 |
0.9615 |
|
USD/CHF |
1.0263 |
1.0265 |
|
USD/CAD |
0.9843 |
0.9845 |
|
EUR/GBP |
0.7971 |
0.7973 |
|
EUR/CHF |
1.6182 |
1.6184 |
|
EUR/JPY |
162.77 |
162.79 |
This means you could either:
|
Buy the pair at the Ask rate
Which means:
Buy
1 EUR /
Sell
$1.5422
|
- or -
|
Sell the pair at the Bid rate
Which means:
Sell 1 EUR /
Buy $1.5420
|
OK, but where's the profit?
The currency pair rates are volatile and constantly changing.
One way to profit is by buying a pair, then selling it at a higher rate.
The second way is by selling the pair, then buying it at a lower rate.
I'm no professional economist, so how can I know if the rate is going up or down?
Pay a visit to the next chapter which will introduce you to a new friend:
the trend.