The Forex Blogger

In currency trading currencies that are traded without restraint on foreign-exchange markets have a spot rate (applying to the trades that are only regarded as “spot”, i.e., two working days hence) and a forward rate. Countries can decide their exchange rates in a multiple ways.
1. A balanced exchange rate system where the currency finds its individual value in the market.
2. A crowded or elastic peg system which is a grouping of an officially preset rate and common small corrections which in theory cancel out a build-up of assumption about a revaluation or devaluation.
3. A fixed exchange-rate system where the government and/or the central bank sets the value of the currency for forex currency trading in forex trading platforms.

• EURUSD - Means that you can buy and sell EUR against dollars. If you buy euro you pay in dollars and if you sell euro you accept dollars.

• FX, Forex, Foreign Exchange - All are terms that indicate the transaction of one currency for another, e.g. you buy GBP 120.00 with USD 170.25 or sell USD 170.25 for GBP 120.00.

• Interbank - Temporary (often overnight) borrowing and lending among banks, which is different from a banks business with their corporate clients or other financial institutions.

• Interest rate differential-The profit spread between two that also can be regarded as equivalent debt instruments designated in different currencies.