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Forex Trading - All about a Foreign exchange Quote. The word Forex comes from the words "Foreign Exchange". Unlike the other money market globally , Forex is open 24 hours each day where there is always a major fiscal center open where banks, dealers, hedge funds, corporations, individual financiers and investors are trading currencies.
The accumulative buy and sell of a currency causes the value of your Foreign exchange investment to move either up or down. There are countless factors that cause the fluctuation of exchange rate. A nations political, social and fundamental economic environment and their central banking institutions economic policy, rate of interest adjustment are the common factors. To have a more comprehensive understanding the way in which the foreign exchange rate may affect the cost of your Forex investment, this article will focus on the topic of Forex Quote.
Currencies are traded in pairs and each currency has its own symbol. For the EU Buck dollar- it is EUR, Japanese Yen - it is JPY, for the Pounds Sterling - it is GBP, and for the Swiss Franc - it is CHF. Thus, EUR/USD would be Euro-Dollar pair. GBP/$ would be pounds Sterling-Dollar pair and USD/CHF would be Dollar-Swiss Franc pair and so on and so forth.
You will always see the Dollars quoted first with few exceptions like Pounds Sterling, Euro Dollar, Australia Buck (AUD) and New Zealand Greenback (NZD. The 1st currency quoted is called the base currency. This is not a surprise as the U.S. Buck is regarded as the central currency of the Forex market and is involved in virtually 90% of all Foreign exchange transactions.
So how are these currency pairs quoted on the Forex market? You will see two numbers on all Currency exchange quotes. The 1st number is called the bid and the second's called the offer (or the ASK) price. Take as an example EURUSD, you'll see 1.4625/1.4630. The first quote of 1.4625 is the bid price, the price where traders are prepared to buy Euro dollar against the USD Greenback. The second number 1.4630 is the offer or ask price and it's the price traders are prepared to sell the Euro against the US Dollar. You'll see that there is a difference between the bid and the offer price. This difference is commonly known as the spread. Based mostly on the prior EUR/USD quote, you know that 1 EU Dollar is equal 1.4625 US dollar.
The way profit is measured of a currency is by "pips" or point. PIP is the acronym for price interest point. If the EUR/USD moves from 1.4625 to 1.4655 that's 50 pips. A pip or 0.001 is the last decimal place of a currency quotation with the single exception of the Japanese Yen and Yen cross rates. A price movement for the USD/JPY from 111.10 to 111.60 will be 50 pips.
The target and goal for all Forex Traders are to benefit from foreign currency movements. The benefits of trading Forex are immense and the sum of money you can earn can be life changing and eventually leads you to reach financial independence. This needs continuing and adequate understanding and training in Foreign exchange education. This education may often include understanding technical analysis, chart pattern and formation, trade management such as stop loss and profit target and cash management. And if you invest and get the right Forex Trading data, you can enjoy long term fx trading success.
The accumulative buy and sell of a currency causes the value of your Foreign exchange investment to move either up or down. There are countless factors that cause the fluctuation of exchange rate. A nations political, social and fundamental economic environment and their central banking institutions economic policy, rate of interest adjustment are the common factors. To have a more comprehensive understanding the way in which the foreign exchange rate may affect the cost of your Forex investment, this article will focus on the topic of Forex Quote.
Currencies are traded in pairs and each currency has its own symbol. For the EU Buck dollar- it is EUR, Japanese Yen - it is JPY, for the Pounds Sterling - it is GBP, and for the Swiss Franc - it is CHF. Thus, EUR/USD would be Euro-Dollar pair. GBP/$ would be pounds Sterling-Dollar pair and USD/CHF would be Dollar-Swiss Franc pair and so on and so forth.
You will always see the Dollars quoted first with few exceptions like Pounds Sterling, Euro Dollar, Australia Buck (AUD) and New Zealand Greenback (NZD. The 1st currency quoted is called the base currency. This is not a surprise as the U.S. Buck is regarded as the central currency of the Forex market and is involved in virtually 90% of all Foreign exchange transactions.
So how are these currency pairs quoted on the Forex market? You will see two numbers on all Currency exchange quotes. The 1st number is called the bid and the second's called the offer (or the ASK) price. Take as an example EURUSD, you'll see 1.4625/1.4630. The first quote of 1.4625 is the bid price, the price where traders are prepared to buy Euro dollar against the USD Greenback. The second number 1.4630 is the offer or ask price and it's the price traders are prepared to sell the Euro against the US Dollar. You'll see that there is a difference between the bid and the offer price. This difference is commonly known as the spread. Based mostly on the prior EUR/USD quote, you know that 1 EU Dollar is equal 1.4625 US dollar.
The way profit is measured of a currency is by "pips" or point. PIP is the acronym for price interest point. If the EUR/USD moves from 1.4625 to 1.4655 that's 50 pips. A pip or 0.001 is the last decimal place of a currency quotation with the single exception of the Japanese Yen and Yen cross rates. A price movement for the USD/JPY from 111.10 to 111.60 will be 50 pips.
The target and goal for all Forex Traders are to benefit from foreign currency movements. The benefits of trading Forex are immense and the sum of money you can earn can be life changing and eventually leads you to reach financial independence. This needs continuing and adequate understanding and training in Foreign exchange education. This education may often include understanding technical analysis, chart pattern and formation, trade management such as stop loss and profit target and cash management. And if you invest and get the right Forex Trading data, you can enjoy long term fx trading success.
About the Author:
Todd Watson trades in Forex, tests Binary Option strategy and is always hunting for the next best Forex Robot.
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