THEURBANREALIST
  • UR LIFE & STYLE
    • UR FASHION
    • UR FIT
    • UR CULTURED
  • UR MUST-HAVES
  • UR HOME
  • UR BEAUTY
  • UR TRAVEL
  • UR AESTHETIC
  • UR PETS
  • UR ABOUT
  • UR DISCLOSURE
T H E U R B A N R E A L I S T

YOUR GUIDE TO LIVING LIFE TO THE FULLEST

THEURBANREALIST
  • UR LIFE & STYLE
    • UR FASHION
    • UR FIT
    • UR CULTURED
  • UR MUST-HAVES
  • UR HOME
  • UR BEAUTY
  • UR TRAVEL
  • UR AESTHETIC
  • UR PETS
  • UR ABOUT
  • UR DISCLOSURE
  • UR LIFE & STYLE

Why Exchange Rates Are Important When It Comes to Stock Trading

  • November 4, 2019
  • 3 minute read
Pin it
Share
Tweet
Share
Share
Share
Share

Trading currency is a popular pastime and career path for many around the world. As we delve into trading and its benefits it is important for us to take a look at the theory behind trading and how it came to be. 

 

There are many countries around the world, and with them many currencies. As each country around the world has different commidities and merits, their currencies are worth verying values. Whether you look at Euro, USD, GBP or Italian version of Inside Bitcoins; you’ll see a difference in value per unit of currency. This concept is known as an exchange rate. 

 

If you were to take a currency pair such as GBP/USD, the current exchange rate at the time of writing this is 1/1.29. This means that if you were in the USA and you wanted to buy 1 British Pound Sterling, you would have to pay 1.39 Dollars for it.

 

Most of us are familiar with exchange rates in terms of going on vacation and swapping currency for our adventures, but how many of us really know why we have exchange rates in the first place? When it comes to learning how to trade on the foreign exchange market, these rates are essential and because of this, it can be a great idea for us to learn more about their origins and importance.

 

Coins have been around for thousands of years with people giving other people gold in exchange for food, clothes and other services. Logically you would assume that the whole world should have one universal currency, but this has never been the case. The main reason for this is that different parts of the world are gifted with different volumes of precious metals and ores. We all know that gold is mined from the ground, and it stands to reason that there are hotspots for gold around the world, where others are sparse. The reason why gold is valued differently in different places is due to supply and demand.

 

Here’s an example of exchange rates in action:

 

There are three people in a group, looking to exchange apples between themselves. Person 1 has 20 apples, Person 2 has 5 apples, and Person 3 has 1 apple. If someone asked Person 1 for an apple, they would gladly give it for a lower price because they still have lots of apples left. Person 2 will give the apple for a higher price because they only have 5, and Person 3 would need a large sum of money to convince them to part with their only apple.

 

In this scenario, we can replace people with countries, and apples with gold. Parts of the world who have a lot of gold will have a lower exchange value than those who have less.

 

Bringing this forward, and we can now see why exchange rates exist and why people spend time trading currency on the foreign exchange market. In 1935 the USA set a specific value for 1 ounce of gold, and this value was set at $35. Most countries after the second world war, therefore, set their own currency values in relation to the dollar and this is where the differences built up, and the idea of trading currency really took off. Throughout the years, things have changed due to historical and political events, and by the ’70s the dollar didn’t stand for a specific volume of gold any longer. However, as things we already well established around the world, currencies still continue to fluctuate to this day.

 

Share
Pin it
Tweet
Share
Share
Share
Share
Danasiafantastic

Danasia Fantastic founded TheUrbanRealist in early spring 2013. She loves good cocktails, great conversation and doing what she wants.

JUST FOR YOU, BOO.
2020 design trends
View Post
  • UR LIFE & STYLE

Helpful Tips to Creating a Healthy Home Environment and Living Space

  • Danasiafantastic
  • December 17, 2020
View Post
  • UR LIFE & STYLE

Injecting Hope Into Type 2 Diabetes

  • Danasiafantastic
  • November 13, 2020
motorcycle safety
View Post
  • UR LIFE & STYLE

10 Must-Know Tips For Motorcycle Safety

  • Danasiafantastic
  • November 11, 2020
View Post
  • UR LIFE & STYLE

3 Plants With Incredible Health Benefits

  • Danasiafantastic
  • November 10, 2020
View Post
  • UR LIFE & STYLE

Revealed: 5 Lazy Ways To Save Money

  • Danasiafantastic
  • January 6, 2021
View Post
  • UR LIFE & STYLE

4 Ways to Make Your Bedroom Feel Luxurious Without Breaking The Bank

  • Danasiafantastic
  • October 28, 2020
View Post
  • UR LIFE & STYLE

4 Steps To Living Healthier This New Year

  • Danasiafantastic
  • December 24, 2020
winterize your home
View Post
  • UR LIFE & STYLE

6 Simple Tips On How To Winterize Your Home

  • Danasiafantastic
  • November 3, 2020
UR SOCIAL

This post may contain affiliate links. I will receive a small commission when you purchase an item I’ve suggested in this post, however using my affiliate link won’t cost you any money! Using these links is a great free way to saying thank you if you enjoyed this post. For more information on our affiliate link policy, click here.

Input your search keywords and press Enter.

We are using cookies to give you the best experience on our website.

You can find out more about which cookies we are using or switch them off in settings.

TheUrbanRealist
Powered by  GDPR Cookie Compliance
Privacy Policy

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

You can adjust all of your cookie settings by navigating the tabs on the left hand side.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.

Cookie Policy

For More information about our privacy, affiliate, and cookie policy, please click here: