Understanding
Forex quotes
In
this section you learn how to read and interpret a forex price quote.
In forex trading currencies are always traded in pairs that's because
you're exchanging one country's currency for another. Hence the word
exchange in foreign-exchange. So every time you place a Forex trade
you are buying one currency while simultaneously selling the other
currency.
Reading
the quote may seem a bit confusing at first. However, it’s really
quite simple if you remember 2 things : 1) The first currency listed
is the base currency and 2) the value of the base currency is always
1.
Example
Figure 2 : Sample FX quote
So
in the example listed above, the base currency is the Euro; the other
currency in the pair is called the counter currency, which is the US
dollar. So for our example it means that 1 EUR base currency is equal
to 1.13389 US dollars. If the EUR is the base currency and the quote
goes up that means EUR has strengthened in value, hence the US dollar
has weekend. A rising quote means one EUR can now buy more US dollars
than before. Just like other markets currency quotes always consists
of two prices.
The
bid price is the price at which you can sell the base currency, the
price the brokerage is bidding.
And
the offer price is the price at which you can buy the base currency,
the price the brokerage is offering to you.
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