Understanding Trade Quotes

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Forex trading is about trading currencies. The value or price of a currency can be resolute through varying factors and means. Most importantly a country’s economic and political conditions determine the value or price especially for the state which is issuing it. Also the currency prices are affected from inflation rates and the interest rates. More importantly government is also an influential factor which directly influences the currency value. Government has an authority to issue a currency at low price and to buy any currency by paying high prices.

Sheer size is a powerful point of Foreign Exchange Market. Every currency market has its sheer size which means that while government can control the prices which is short term, markes can prevail invariably in the long run. The Forex market is based on fair and open investment for both participating states.

When it comes to dealing with currency markets, it is essential to understand Forex quotes. The trade quotes are basically three letter country codes which are used for each country involved in foreign exchange. Here are some most important quotes which you may have heard of before:

  • U.S Dollar (USD)
  • United Kingdom Pound (GBP)
  • Japanese Yen (JPY)
  • European euro (EUR)
  • Australian Dollar (AUD)
  • Swiss Franc (CHF)
  • Canadian Dollar (CAD)

The currency quotes are issued in pairs. The first currency is called base while the second currency is the called quote. It is essential to watch prices of quotes as it rises and falls. As the quote currency price increases, the base currency becomes stronger. The rise of every unit in base currency enables to buy more quote currency. If the value for quote currency falls it makes the base currency weaker.

‘Bid’ and ‘ask’ are two other types of Forex quotes. When investors buy or sell any currency traders show more interest in the bid and ask prices for the currencies. Bid price is the value which is paid by the buyer for base currency. It is paid in the form of quote currency. Ask price is the value at which a seller is likely to sell base currency. It is also paid in the form of quote currency.

Forex quotes also involve Symbol Bid Ask. It deals with an important currency pair USD / CAD. This actually tells you that you are not a seller or buyer, it is the dealer who is actually working. The currency pairs which are frequently used by investors / traders are known as ‘Majors’. The Majors of the Forex world are:

  • EUR/USD
  • USD/JPY
  • USD/CAD
  • USD/CHF
  • GBP/USD
  • AUD/ USD

PIPs are a currency quote which are one of a kind. It is called Price Interest Point and it is the currency pair quotes used to the fourth decimal point.

Forex trading invites new and potential investors to establish a source of income while staying at home or doing some other business. It is essential to keep up with the Foreign Exchange Market and its changing trends. Forex can be quite risky as conditions are volatile and can change rapidly. The key to become successful and to avoid risks is to get all the basic information about currency trading and especially understand the Forex quotes.

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