Making a money transfer does not require deep understanding of Forex trading but it will definitely help you in calculating the approximate cost of your transfer and the amount of money the beneficiary will receive. A few general principles to remember include the following: currencies are always traded in pairs; all quotes contain a pair of three-letter trading symbols of the currencies traded. The first currency symbol is the base or selling currency and the later is the currency that you are buying.
The United States dollar is represented by the abbreviation USD, for instance, while GBP stands for the British pound, JPY is represented by the symbol JPY, EUR stands for the European euro, the Australian dollar is seen as AUD, CHF stands for the Swiss franc, and the Canadian dollar is represented by the symbol CAD, to list only the major currencies. Sometimes you can see a specific graphic symbol depicting a particular currency; the most well known symbols are those of the U.S. dollar, the British pound, the euro and the Japanese yen, despite that other currencies have graphic symbols as well.
No matter what symbols a particular trading platform or chart is using to depict currency pairs and currency rates, you must bear in mind that the first currency in the pair is the one that is more important to you. Imagine you want to send GBP 1,000 to Canada. Therefore, you must buy Canadian dollars to make a money transfer to the recipient. Otherwise, you can send British pounds but one way or another the beneficiary will have to convert your British pounds to Canadian dollars. Such being the case, you must obtain a currency rate chart to calculate the value of the transfer. In any case, you will get a chart that will read something like GBP/CAD 1.63524 or GBP/CAD = 1.63524. In broad terms, this means that right now the British pound is stronger than the Canadian dollar and 1 GBP can buy 1.63524 Canadian dollars. Multiplying the currency exchange rate by the amount of money you plan to transfer i.e. GBP 1,000 x CAD 1.63524 you will obtain a result of 1635.24 Canadian dollars that your pounds will buy.
This is the approximate value of the money transfer after conversion into the recipients currency; however, you have to bear in mind that the actual sum the beneficiary will receive will be of a smaller value due to commissions, fees and all other applicable charges. Moreover, this exchange rate is only for your information; it is obtained online by a reputable money transfer provider but the Forex market is extremely volatile and liquid so the currency rates fluctuate in minutes and the final currency rate you get would be quite different. Nevertheless, it is always a good idea to check the present currency exchange rates. Doing so will allow you to make a more informed decision selecting a money transfer provider by comparing the exchange rates being offered.
Dr Timothy Ross is an expert on the financial markets. Recommendation: If you need to make a large or regular overseas payment consider the help of a money transfer specialist as an alternative to your bank.