left hand side

Foreign exchange(forex) traders simultaneous exchange, buy or sell currency for speculation purpose. The trade is similar to the stock exchange and it often uses the term left-hand side(LHS) or right-hand side(RHS) to explain the exchange rates, in terms of, base. For example GBPUSD – if it is equal to 1.65 –shows the rate of one unit.

The first three letters are the base and the next three refer to the currency that one is buying or selling for 1 unit of the base. In such trade the investor expects the rate of a currency to rise in future like a stock and he will buy more currency pair if he/ she expects the rates to increase and will sell if he/ she expect the price to drop in future.

If a client wants to buy GBP and sell USD, then the forex calculator takes the price that is on the right-hand side \but if you are selling the base, you are on the left-hand side.

This is also used in forward exchange rates GBP EUR where the investor expects to hedge against risks. The investor contracts to exchange the USD proceeds for EUR in the future at a specific rate with the expectation to gain from appreciation in EUR.