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All About A Forex Quote

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.

The cumulative buy and sell of a currency causes the value of your Forex 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 Forex investment, this article will concentrate on the topic of Forex 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 Forex market and is involved in nearly 90% of all Forex transactions.

So how are these currency pairs quoted on the Forex 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 Forex Traders are to profit from foreign currency movements. The rewards of trading Forex 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 Forex 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 Forex Trading knowledge, you can enjoy long term currency trading success.

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10 comments:

  1. What I like about forex is that there is no middlemen. That's one of its differences on stock market.

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  2. I have being reading about forex even trying to invest in it but I needed to know more about it before investing. I just saved this page for future use.

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  3. Forex trading has been around for a long time..although I know little about it..one thing I know is that its very risky..
    Thanks a bunch for giving us some information on forex..

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  4. I am learning more and more about forex trading from your website. That concept about bid and offer I have seen it displayed but i didn't quite understand which figure represented what.

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  5. I am learning more and more about forex trading from your website. That concept about bid and offer I have seen it displayed but i didn't quite understand which figure represented what.

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  6. I'm not completely clear on some aspects of the forex quote but this article has given me a good starting point to learn more. Great work and keep articles like these coming.

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  7. I'd like to one day get to the point of being able to make profits simply from currency movements. Your post strikes the right spot when it comes to forex quotes.

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  8. I heard about FDorex long ago, but I didn't trade becaus I had no experience. Thankss for sharing this post, now I have a betetr idea about how Forex works.

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  9. At this point I am like a deer in headlights. So many stocks variations that the info I am taking in might be too much for me. It is not on you though rather its on me for breezing through this in fast speeds.

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  10. My eyes got this from your article The rewards of trading Forex are immense and the amount of money one can earn can be life changing and ultimately leads one to achieve financial freedom. This requires continuous and adequate understanding. I believe this is the people really need to see.

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