Online Currency Exchange

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DEFINITION of 'Online Currency Exchange '

An online system for exchanging one country's currency for another. There is no central exchange in the forex market because it is a network of computers that connect banks, brokers and traders together. Online currency exchanges are essentially forex brokers that allow for delivery of the currencies traded.

BREAKING DOWN 'Online Currency Exchange '

Online forex currency exchanges will often provide the service of an online currency converter along with the option to actually convert the currencies for a nominal fee. This fee is similar to the spread quoted in pips.

A couple of advantages of exchanging currencies online include being able to do it from the comfort of your home or office, and/or being able to lock in a preferred exchange rate at the time you see it, rather than having to run to the brick-and-mortar currency exchange and risk missing the rate because of market movements.

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RELATED FAQS
  1. How do I convert dollars to pounds, euros to yen, or francs to dollars, etc.?

    Currency can be converted using an online currency exchange or it can be converted manually. To use either method, you must ... Read Full Answer >>
  2. How many types of markets can an investor choose from?

    There are a wide variety of markets in which one can invest money. The main markets are stocks (equity), bonds, forex, derivatives ... Read Full Answer >>
  3. What does rollover mean in the context of the forex market?

    In the forex (FX) market, rollover is the process of extending the settlement date of an open position. In most currency ... Read Full Answer >>
  4. What are the goals of covered interest arbitrage?

    The goals of covered interest arbitrage include enabling investors to trade volatile currency pairs without risk as well ... Read Full Answer >>
  5. Where did the term 'pip' in currency exchange come from?

    The term pip is an acronym for percentage in point or price interest point. It measures a unit of change within a pair of ... Read Full Answer >>
  6. How do changes in national interest rates affect a currency's value and exchange ...

    All other factors being equal, higher interest rates in a country increase the value of that country's currency relative ... Read Full Answer >>

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