In the Forex market the value of two separate currencies and how they relate to one another is what is known as the Forex exchange rate. Usually the Forex rate is how much of one currency is needed to buy a unit of another. Just to give you an example of how the Foreign exchange rate can work and to help you better understands it we can compare the United States dollar with the Japanese yen. This ratio in the exchange rate is also known as pairing. A few other terms used in the Forex exchange are pips or basis points, which are actually two terms used for the same thing. In using the Forex exchange rate you are required to use two currencies and this means they are quoted as ‘two tier’ rates. Also in the Forex market its price basis is called a bid/ask. One thing you should remember however when it comes to the Forex is that only Forex traders who are licensed can access official quoted rates. One last thing concerning the Forex exchange rate is that it is independently determined. With the benefits and knowledge of how the Forex exchange works you can decide if entering the Forex market is the right move for you.

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