What are The European Terms?

European terms are a way of specifying exchange rates where the USD is always the base currency foreign exchange market today. It is an alternative to the direct or US exchange rate terms, which refer to the amount of foreign currency required to buy a US dollar.



Understand European terms

When currency pairs are traded on the forex market, prices are determined using the base currency and the quoted currency (also known as terms or counter currency). Currency pairs can be represented as: Base Currency / Quote Currency or, for example, USD / EUR forex trading platforms in India. This is known as a direct quote. From a European perspective, the USD is always placed in the base currency position, which means the amount of foreign currency needed to buy a US dollar. It's kind of an indirect quote.

Example

For example, suppose the offer rate is USD / EUR at 0.829 and the offer rate is USD / EUR at 0.831. From the perspective of the United States, these quotes are given in European terms. The first would mean that a buyer is willing to pay a maximum of 0.829 euros for one US dollar, while the second is the minimum that a seller is willing to receive for one dollar. In this case € 0.831. Regardless of the trading convention, when you buy a currency pair, you are buying the base currency and selling the forward currency. In contrast, when you sell a currency pair, you are selling the base currency and buying the forward currency.



Forex Trading and European Conditions

The exchange is priced in foreign currencies. The forex market is the largest and most liquid market in the world.1 Trader can make a profit by trading currencies in the same way that they can trade other assets. Buying currencies at a low price and reselling them at a high price is the same goal as other investments if you are looking for positive returns best broker in India for forex. When trading currencies, it is essential that investors understand the terms of the currencies represented. When trading currencies with USD, the currency is expressed in US or European terms, as is common practice.

Europe On The Spot Market

For example, the Swiss franc (CHF) is listed in Europe on the spot market. The currency pair is represented in USD / CHF. In contrast, the British pound (GBP) is traded in US currency on the futures market. It is represented in GBP / USD. Oftentimes, the trading convention for futures contracts is different from the spot convention, and it is important for traders to know this in order to know which direction to trade.

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