Heed the fact that reading Forex quotes is not an easy thing to do because without knowing the order and nuances you won’t manage to decipher quotes of the Forex market correctly. This can result in negative consequences such as losing money or even becoming financially broke. If you presume that you can read Forex quotes easily only due to the fact that you are used to deciphering stock quotes, you are mistaken.
The Forex market is totally different. And, if you are confident of your facts and knowledge but are still reading these quotes incorrectly, your chances of a career as a Forex trader are slim. Foremost, let’s focus on the fact that deciphering any FX quote is not as difficult as most Forex beginners think, especially after profound tutorials given by more experienced experts. Don’t get yourself confused with all the nuances, rather learn to read Forex quotes correctly from the beginning.
Try to use the following advice and tips to get you started. Always treat the reading of FX quotes seriously. Ignoring them is not an option and you need to stick to a golden mean by finding a professional to advise and guide you on how to decipher FX quotes before you start investing real money into Forex or stock trading in the market. The first investments are very important and should not be large, but a proper reading of quotes is required even at the initial level, so learn this method given below in the first turn.
THE TWO MOST MEANINGFUL THINGS WHICH CONCERN FOREX QUOTES THAT YOU NEED TO REMEMBER:
- The currency which is listed in the first turn is called the base currency;
- The value of the base currency has been one (always, this number is stable).
During Forex market trading a participant should keep in mind that quotes which are usually two-sided and consist of the ask and bid prices. To decipher these prices you have to know that the asking price stands for the price at which a trader can purchase the base currency and simultaneously sell the counter (the second in the currency pair) currency. While the bid price means the price at which a trader can only sell the base currency.
WHAT TIPS SHOULD YOU STICK TO IN ORDER TO DECIPHER FOREX QUOTES? – USD currency is by default considered as the base currency for FX quotes. It features such currency pairs as USD/JPY, USD/CAD and USD/CHF. – A mix of two currencies which are involved in trading at the FX market is labelled as the ‘cross’. USD/CHF denotes (means), for instance, that Forex quote is valid for a trader who intends to buy CHF using USD. –
Forex quotes are mostly expressed as units of one dollar each per the counter currency in the pair chosen for trading. For example, a quote of USD/JPY: 120.01 – denotes that one dollar is equal to 120.01 yen. – In a case where a currency FX quote rises, it means the USD has appreciated in its value and the counter currency has gone down. – In a case when the USD/JPY quote rises up to 123.01, the USD is obviously stronger because using dollars a trader can buy more yens. However, there are a few exceptions here: British pound (GBP), the Euro (EUR) and the Australian dollar (AUD) can be classified as these exceptions.
For example, if the quote of the pair GBP/USD is 1.435 it denotes that one British dollar can be bought by using 1.435 USD. This means that USD in these three currency pairs is not the base rate and a rising of a quote means a weakening of the dollar’s position because a trader will require more dollars to buy pounds, Australian dollars and euro. – And the last thing you have to keep in mind is that when a currency quote rises it means increasing of the base currency’s value and a lower Forex quote stands for the base currency lessening.
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