From the course: Understanding Capital Markets
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Buying and selling in FX
- [Instructor] Let's take a look at how buying and selling works in the FX markets, and the risks associated with this sophisticated but risky area. So, I'm here at Forex.com, which is simply a foreign exchange trading website. It's one of many that are out there. Now, I've pulled up the U.S. dollar euro pair. And what we see here is that the U.S. dollar euro pair has, of course, an exchange rate that we think about. But just like with stocks, where we think about a stock having a single price, the exchange rate that we think about between U.S. dollars and euros is actually two different rates. One rate if we're trying to buy, one rate if we're trying to sell. In stocks, we term this the bid and the ask. Here, for FX purposes and for simplicity, they're calling it sell and buy. So, if you want to sell one euro and turn it into U.S. dollars, you'll get 1.13 U.S. dollars. For every euro you have, you'll get a dollar…
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