How it works: currency exchange 101

Each day, on average, over $6.5 trillion is traded in the currency market by banks, financial institutions, corporations and individuals. These participants buy, sell, exchange and speculate on currencies based on political and economic variables - from interest rates and inflation to elections and political stability. The resulting supply and demand of one currency against another causes them to rise and fall in value against each other.

All international payments require the simultaneous buying and selling of two currencies. Known as a ‘currency pair’, this consists of a base currency first and a quote currency second - such as GBP/EUR. The pair represents the value of one currency in terms of another and is used to denote the exchange rate between the two. This shows how much of the quote currency is needed to purchase one unit of the base currency when making a conversion.

Making your currency trades can be a simple process if you use a platform that enables you to trade quickly and securely. Having taken the time to understand the basics of trading currency, open an account with a currency specialist like Lumon and work in partnership with your dedicated account manager to define your goals and establish a proactive strategy. With your preparation complete, you will be well-placed to get the best value for your money, without delay.

Don’t leave the value of your currency trades exposed to fluctuating exchange rates. With your international payment goals defined, it’s time to contact your dedicated account manager to establish a proactive strategy that considers your circumstances, including trade type and timescales. At Lumon, not only can you trade currency on your online account with ease, but your dedicated account manager is on hand to help you harness market insight and products, where applicable, so you can execute your trades with confidence.