This is the main factor behind Forex or foreign exchange. The values of both currencies are subject to fluctuations depending on the supply and demand of the currencies. Changes can occur nearly every minute of the day.

The exchange rate is dependent on a number of factors such as the political and economic status of a country. Traders of Forex take advantage of this to make money. Forex is the biggest market around, and it has a transaction of about 2 trillion US Dollars everyday. 

As seen previously, we need to have two currencies to make a currency pair. The leading currency pairs are EUR/USD (Euro and US Dollar), USD/JPY (US Dollar and the Japanese Yen), USD/CHF (US Dollar and Swiss Franc) and GBP/USD (British Pound and US Dollar). 

Now let us take EUR and USD pair. Here EUR is the “base currency” and USD is the “term” or “price currency”. So, if the exchange rate for EUR/USD is 1.5, that means the term currency of USD is 1.5 to 1 unit of the base currency EUR. 

Looking up the internet you can find instant quotes for the various exchange rates. Never dip into Forex without knowing the exchange rates of the past weeks, months and even years. And remember, while Forex trading has potential to reap profits, it can also make you lose money.

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