All About A Forex QuoteBy Rohit of Bigplanners.com
The word is derived from the words "FOReign EXchange. Unlike other financial market in the world,
Forex is open 24 hours every day where there is always a major financial center open where banks, dealers, hedge funds,
corporations, individual investors and speculators are trading currencies.
The cumulative buy and sell of a currency causes the value of your investment to move either up or down.
There are numerous factors that cause the fluctuation of exchange rate.
A country's political, social and fundamental
economic environment and their central banks fiscal policy, interest rate adjustment are some of the common factors.
To have a better understanding how the currency exchange rate can affect the value of your investment, this article will concentrate on the topic of Quote.
Currencies are traded in pairs and each currency has its own symbol. For the Euro dollar- it is EUR,
Japanese Yen - it is JPY, for the Pounds Sterling - it is GBP, and for the Swiss Franc - it is CHF.
Hence, EUR/USD would be Euro-Dollar pair. GBP/USD 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 USD quoted first with few exceptions such as Pounds Sterling, Euro
Dollar, Australia Dollar (AUD) and New Zealand Dollar (NZD.
The first currency quoted is called the base currency. This is not surprising as the U.S.
dollar is regarded as the central currency of the market and is involved in nearly 90% of
all transactions.
So how are these currency pairs quoted on the market? You will see two numbers on all
Forex quotes. The first number is called the bid and the second is known as the offer
(or the ASK) price. Take for instance EURUSD, you will see 1.4625/1.4630. The first quote of
1.4625 is the bid price, the price where traders are prepared to buy Euro against the USD Dollar.
The second number 1.4630 is the offer or ask price and it is the price traders are prepared to
sell the Euro against the US Dollar. You will notice that there is a difference between the bid
and the offer price. This difference is known as the spread. Based on the previous EUR/USD quote,
you know that 1 Euro 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 is 50 pips. A pip or 0.001 is
the last decimal place of a currency quotation with the 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 objective and goal for all Traders are to profit from foreign currency movements.
The rewards of trading are immense and the amount of money you can earn can be life
changing and ultimately leads you to achieve financial freedom. This requires continuous and
adequate understanding and training in education.
This education may include understanding technical analysis, chart pattern and formation, trade management such as stop loss and profit
target and money management. And if you invest and get the right Trading knowledge, you
can enjoy long term currency trading success.
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The word FOREX is derived from the words "FOReign EXchange. Unlike other financial market in the world, Forex is open 24 hours every day where there is always a major financial center open where banks, dealers, hedge funds, corporations, individual investors and speculators are trading currencies.
