Dual Currency Service
What Is a Dual Currency Service?
A dual currency service is a forex trading service that permits an investor to theorize on exchange rate movement between two specific currencies through a fund or instrument.
A dual currency service ordinarily requires the investor to make directional speculations between the currencies, for example, guessing that the U.S. dollar will rise against the yen.
Understanding Dual Currency Services
Dual currency service instruments normally include currency pairs of major, liquid currencies, like the U.S. dollar, British pound, Swiss franc, euro and Japanese yen. In a currency pair, the value of two currencies, the base currency and the quote currency, are compared to one another. It takes a gander at the amount of the quote currency is required to buy one unit of the base currency. Currency pairs are traded in the foreign exchange market, or the forex market. The most traded currency pair in the world, and the most liquid one too, is the euro against the U.S. dollar, which is indicated as EUR/USD.
Since a dual currency service is a directional service, investors are able to make generalized price wagers instead of wagers on the specific exchange rate spot prices.
Forex and Currency Pairs
The foreign exchange (FX) marke is where currencies are bought, sold, exchanged, and where they become the subject of speculation. It is the biggest and most liquid financial market in the world.
All forex trades include buying and selling of currency pairs, where one currency is sold and another is bought. Frequently, currency pairs are considered single units that can be bought or sold. The number of currency pairs that exist fluctuates as currencies come all through circulation and presence.
At the point when traders buy or sell currencies in the foreign exchange market, they are not trading genuine physical currencies, but rather making a bet on the strength of the currency relative to another. Assuming they are buying a currency, they are trusting its value will strengthen corresponding to the currency in the pair that is sold to create a gain, though when they sell currencies they hope for the inverse.
Generally, currencies that are traded in exchange for the U.S. dollar (USD) are called major currencies, while those currencies that are not associated with the USD are alluded to as minor currencies. They are not quite so liquid as major currencies. A few models incorporate EUR/GBP and EUR/CHF. At the point when currency pairs incorporate the currencies of emerging markets, they are alluded to as exotic currencies pairs, an illustration of which would be USD/MUR. These currency pairs are not as liquid and have more extensive spreads.
Features
- Currency pairs are the foundation for all forex trading strategies.
- Frequently utilizing major currency pairs, a dual currency service is expected for directional wagers in exchange rate spreads and not on spot rates.
- A dual currency service is a fundamental forex trading service permitting speculation in exchange rate movements between a pair of currencies.
