Forex For Beginners – Basic Forex Terms
Today, we’re going to start to introduce you to basic forex terms. First, we’ll explain what the term “exchange rate” means
“Exchange Rate” can be defined as the price of one currency in relation to another.
A fixed exchange rate, like the one established in 1944 by the Bretton Woods Accord, is an official rate set by monetary authorities (and sometimes governments).
Fixed rates are typically set to a pre-determined value (e.g., the price of an ounce of gold), and allowed only slight fluctuation.
A floating exchange rate is what is in effect on the foreign exchange market today. This type of rate is not set to any outside reference point. Rather, the rate is determined by the market forces of supply and demand.
Tomorrow, our next concept: “Currency Pairs”
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