Exchange rate for foreign currency defines how much does the currency cost relative to other currency. For instance the US dollar rate in Euro currency shows how much euro a customer needs to spend to buy one US dollar. In this case dollar is a good, while Euro is a currency for buying this good. As for Forex exchange rates there are a few different kinds of them. You should understand what each one means and when it is used.
Choosing the seller or buyer side in Forex deal you will use different rates for currency exchange. The seller usually offers its currency at a price that would be higher that buyers, one. For instance USDGPB rate can be 0.625 from a buyer and 0.632 from a seller. This means that a seller offers one US dollar for 0.632 British Pounds, while a buyer is ready to buy it for 0.625 Pounds. The buyer’s price is called BID exchange rate, while the seller’s one is known as ASK rate. A trader can either sell USD to the bank at an ASK rate or buy this currency at a BID rate.
To make profit from currency exchange you should wait until Forex exchange rates will change so you would be able to sell it at bigger rate than you bought. Logically, the deal becomes reasonable, when this move is bigger than the initial difference between BID and ASK rates that were at the moment of your purchase.
In Forex exchange rates tables you can also meet the LAST rate which displays the average value of the last BID and ASK rates. You should remember that selling currency is always profitable when the statistics chart goes down, while buying currency is reasonable in the opposite situation – when the chart goes up.
BID, ASK and LAST rates are the main indexes in Forex rate tables, there are also CHANGE, HIGH and LOW columns which demonstrate the dynamics in rate changes and give you ability to predict the next move.