Foreign Exchange Trading - All about a Forex Quote. The word Forex is derived from the words "Foreign Exchange". Unlike the other financial market in the world , Forex is open 24 hours each day where there is always a major fiscal center open where banks, dealers, hedge funds, corporations, individual investors and stockholders are trading currencies.
The accumulative buy and sell of a currency causes the value of your Currency exchange investment to move either down or up. There are numerous factors that cause the fluctuation of exchange rate. A nations political, social and basic economic environment and their central banking organizations fiscal policy, interest rate alteration are some of the common factors. To have a clearer understanding the way in which the forex rate can affect the value of your Foreign exchange investment, this text 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. Hence, EUR/USD would be Euro-Dollar pair. GBP/$ would be pounds Sterling-Dollar pair and Greenbacks/CHF would be Dollar-Swiss Franc pair and so on and so on.
You'll always see the Dollars quoted first with only a couple of exceptions such as Pounds Sterling, Euro Buck Buck, Australia Dollar (AUD) and New Zealand Greenback (NZD. The first currency quoted is named the base currency. This is not surprising as the U.S. Buck is thought of as the central currency of the Currency market and is concerned in virtually 90% of all Forex transactions.
So how are these currency pairs quoted on the Currency market? You'll see two numbers on all Currency exchange quotes. The first number is named the bid and the second's known as 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 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 EU Buck against the US Dollar. You'll observe that there's a difference between the bid and the offer cost. This difference is known as the spread. Based totally on the previous EUR/USD quote, you know that 1 Euro 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 is 50 pips. A pip or 0.001 is the last decimal place of a currency quotation with the sole 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 profit from foreign currency movements. The advantages of trading Foreign exchange are gigantic and the sum of money you can earn can be life changing and at last leads you to achieve financial independence. This needs continuing and adequate understanding and training in Foreign exchange education. This education can 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 Foreign Exchange Trading knowledge, you can enjoy long term foreign exchange trading success.
The accumulative buy and sell of a currency causes the value of your Currency exchange investment to move either down or up. There are numerous factors that cause the fluctuation of exchange rate. A nations political, social and basic economic environment and their central banking organizations fiscal policy, interest rate alteration are some of the common factors. To have a clearer understanding the way in which the forex rate can affect the value of your Foreign exchange investment, this text 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. Hence, EUR/USD would be Euro-Dollar pair. GBP/$ would be pounds Sterling-Dollar pair and Greenbacks/CHF would be Dollar-Swiss Franc pair and so on and so on.
You'll always see the Dollars quoted first with only a couple of exceptions such as Pounds Sterling, Euro Buck Buck, Australia Dollar (AUD) and New Zealand Greenback (NZD. The first currency quoted is named the base currency. This is not surprising as the U.S. Buck is thought of as the central currency of the Currency market and is concerned in virtually 90% of all Forex transactions.
So how are these currency pairs quoted on the Currency market? You'll see two numbers on all Currency exchange quotes. The first number is named the bid and the second's known as 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 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 EU Buck against the US Dollar. You'll observe that there's a difference between the bid and the offer cost. This difference is known as the spread. Based totally on the previous EUR/USD quote, you know that 1 Euro 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 is 50 pips. A pip or 0.001 is the last decimal place of a currency quotation with the sole 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 profit from foreign currency movements. The advantages of trading Foreign exchange are gigantic and the sum of money you can earn can be life changing and at last leads you to achieve financial independence. This needs continuing and adequate understanding and training in Foreign exchange education. This education can 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 Foreign Exchange Trading knowledge, you can enjoy long term foreign exchange 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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