Heed the fact that reading Forex quotes can be not so easy thing to do as some not reliable Forex brokers and investors say because without knowing a certain order and nuances you won’t manage to decipher quotes of the Forex market correctly which can bring such negative consequences as losing money or even being broken from the financial point of view.
If you suppose that you can read Forex quotes easily only due to the fact you got used to decipher stock quotes you are wrong as well because quotes in the Forex market are totally different. In a case you are quite sure in your forces and knowledge but can’t read these quotes in a correct way forget about starting your careers as a Forex trader.
Foremost let’s focus on the fact that ciphering any FX quote is not as difficult as most of Forex beginners start to think after profound tutorials given by their more experienced experts. Never be confused with all nuances you will have to learn to read Forex quotes properly and better lose your energy on careful analysis of the following issues and tips.
Treating reading FX quotes seriously is not right but ignoring of this is not an option as well so stick to a golden mean and then you will need to find few professional advices and guides how to decipher FX quotes before investing real money into trading in the Forex market or bitcoin investing. The first investments are very important and should not be large but proper reading of quotes is required even at the initial level, so learn this method given below in the first turn.
THERE ARE TWO MOST MEANINGFUL THINGS WHICH CONCERN FOREX QUOTES YOU NEED TO REMEMBER:
- the currency which is listed in the first turn is called the base currency.
- the value of the base currency is 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 ask 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 YOU SHOULD 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 into trading at the FX market is labeled as the ‘cross’. USD/CHF denotes, 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 a currency FX quote rises it denotes that 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, USD is obviously stronger because using dollars a trader can buy more yens. However, there are 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 denotes a weakening of 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.