Forex Cross Rates Help With Foreign Currency Trading

Forex Cross Rates is a term used in trading foreign currency. The word Forex is simply an accepted way of distinguishing a foreign exchange versus a U.S. market. Foreign exchanges trade currency, stocks, bonds and options. Foreign exchanges trade similar to the exchanges in the U.S., however you must be aware that quotes are given in the foreign currency of that country, and one unit of their currency may be of less or more value than the U.S. dollar. Foreign exchange rules differ from U.S exchange rules. You should be familiar with the rules of the exchange or deal with a broker who has experience with that particular foreign exchange. Free FOREX trading videos daily.In the past, a trader who wished to exchange his money into a currency from a different country would have to first convert it into U.S. dollars and then convert it to the type of currency he wanted. This is now bypassed by using a cross currency trade. A cross currency trade can take place between any two currencies, which do not involve the U.S. dollar. A EUR/JPY trade would mean paying Euros for yen; it would also be classified a cross trade.The Rate is the quote on the currency being traded. In other words, in the example above, the rate might be 1.00/0.009; one yen is worth.009 of a euro. Since neither of these currencies is a U. S. dollar, this is an example of a cross rate when quoted in a U.S. newspaper. If either of the currencies involved were the U.S. dollar, it would not be a cross rate quote.Forex cross rates are used by experience traders to judge values of the currencies in each country and to make a decision on whether, or not, to make that trade. Foreign trading can be difficult due to the exchange rates of monies between the countries. Values of currency can change rapidly. Currency trading does not take place on a regulated exchange but rather is done on credit agreements between traders and trading takes place around the clock, every day of the week. Experience and knowledge regarding these markets is needed to be a successful trader.

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