Understanding Forex Quotes

Reading a foreign exchange quote is simple if you remember two things:

  1. The first currency listed is the base currency
  2. The value of the base currency is always 1.

As the centerpiece of the forex market, the US dollar is usually considered the base currency for quotes. When the base currency is USD, think of the quote as telling you what a US dollar is worth in that other currency.

When USD is the base currency and the quote goes up, that means USD has strengthened in value and the other currency has weakened. Rising quotes mean a US dollar can now buy more of the other currency than before.

Majors not based on the US dollar

The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). For these pairs, where USD is not the base currency, a rising quote means the US dollar is weakening and buys less of the other currency than before.

In other words, if a currency quote goes higher, the base currency is getting stronger. A lower quote means the base currency is weakening.

Cross currencies

Currency pairs that don't involve USD at all are called cross currencies, but the premise is the same.

Bids, asks and the spread

Just like other markets, forex quotes consist of two sides, the bid and the ask :

The BID is the price at which you can SELL base currency.
The ASK is the price at which you can BUY base currency.

What's a pip?

Forex prices are often so liquid, they're quoted in tiny increments called pips, or "percentage in point". A pip refers to the fourth decimal point out, or 1/100th of 1%.

For Japanese yen , pips refer to the second decimal point. This is the only exception among the major currencies.

Currency Pairs

Every currency pair has qualities unique to it. Find out what those qualities are.

Much has been written about the suitability of technical analysis for trading in the currency markets. While this is undoubtedly true, it can leave traders, particularly those new to the currency markets, with the impression that all technical tools are equally applicable to all major currency pairs. Perhaps most dangerous from the standpoint of profitability, it can also seduce traders into searching for the proverbial silver bullet: that magic technical tool or study that works for all currency pairs, all the time. However, anyone who has traded forex for any length of time will recognize that, for example, dollar/Yen (USD/JPY) and dollar/Swiss (USD/CHF) trade in distinctly different fashions.

Acquire best price from forex

The forex market is presently the largest and the most lucrative market in the world. The market allows the trading of currencies between different countries. Big corporations, financial organizations, speculators and individuals are the key players in the market. Every day volumes comprises of commercial and government currency conversion along with the trading and speculation.

Foreign exchange trading provides wonderful investment opportunities for all kinds of investors. The main benefits of trading in the future exchange market is that it allows for 24/7 trading, higher liquidity, low trading costs, availability of margin trade opportunities and the convenience to start and end trading at any point of time.
Forex is usually traded on spot, which means that trades are finalised at spot rate and completed within 2 business days. Although, rollovers may occur sometimes where positions remains open and rolls over to the next day and is settled at next day’s price quote. The price quotes for two currencies are identified as the asking or offer price. The offer price is reflected on your right and the offer is on the left.

Forex rates helps in determining whether a country is flourishing or not. Foreign currency exchange markets can be difficult to understand if you are a novice to the entire concept. But if you search hard enough, you can find good information on the internet that can give you the explanation of this complex subject. Foreign exchange rates build up with the trade between two countries. If imports are cheaper, then their currency rates would be higher, but if the import cost is higher, then currency would be lower.

You can find a large amount of information on the internet to understand the concept of foreign exchange better. All you need to do is to look for a renowned and reputed service provider that offers best price quotes for your future trading and foreign exchange services.

History of Foreign Exchange

The foreign exchange market (fx or forex) as we know it today originated in 1973. However, money has been around in one form or another since the time of Pharaohs.
The Babylonians are credited with the first use of paper bills and receipts, but Middle Eastern moneychangers were the first currency traders who exchanged coins from one culture to another.

During the middle ages, the need for another form of currency besides coins emerged as the method of choice. These paper bills represented transferable third-party payments of funds, making foreign currency exchange trading much easier for merchants and traders and causing these regional economies to flourish.

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Welcome to my blog regarding Zulutrade!

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That's enough for now - may the pips be with you!

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