Finance and Credit Professional

Learning to read forex quotes can be a challenge. They present different information than the standard common stock quotes with which most folks are familiar. Should you determine, after spending plenty of time building a forex trading strategy, that you are ready to enter the forex trading market, then you need to make sure that you know how to properly read the foreign exchange trading quotes.

The first part of the quote lets the forex trader know which currency is involved. The nation listed first is referred to as the base currency. This means the trader currently holds that currency and he is using it to buy the quote currency, sometimes called the trade currency. For example, a quote that reads USD/JPY means that the forex trader currently holds United States Dollars and wants to trade them for Japanese Yen. Forex quotes always begin this way, with the two currencies involved forming what's called the cross.

Quick fact : The Forex market is by far the largest financial market in the world, and includes trading between large banks,central banks, currency speculators,multinational corporations, governments, and other financial markets and institutions.

The second part of forex quotes that a person needs to pay attention to is the pricing portion of the quote. To continue the example from above, if the quote reads USD/JPY=117.57, then the trader knows that for every $1 (USD) he trades, he will get 117.57 Japanese Yen (JPY) in return. While that may seem really simple, there are a few more details of these quotes that a forex trader needs to take note of before making the trade.

Did you know that the average daily trade in the global forex markets currently exceeds US$ 2-2.5 trillion !

Following the initial line of the quote, which contains the two currencies that form the cross and the exchange rate, is another line of information. This is probably more familiar to common stock traders. Bid prices and ask prices, which make up an integral part of forex quotes, function in forex much the same way. The bid price is the price at which a trader can sell the currency or in other words, that is the price that people are willing to pay for it. The buy price is what a trader will have to pay if he wants to buy the currency. There is usually a difference between the bid and the buy numbers, but it is seldom substantial.

There are over sixty currencies listed on most major forex trading platforms. As you look through the majority of the forex quotes actually traded though, you will notice that over 85% of them include some combination of the US Dollar, Japanese Yen, Euro, Canadian Dollar, Swiss Franc and the Australian Dollar. Known as the majors, these six currencies constitute the backbone of foreign exchange trading. Historically, they are the most heavily regulated, and as a result, the most stable currencies in the world. This stability makes them safer investments than some other currencies. The feeling of security by investors results in the much higher trade volumes.

About The Author :

Are you looking for more valuable information and hot tips on forex ? We know you are ! Visit our article directory for more details.

Related News

SMFG to buy OMC Card stake for $634 mln - sources (Reuters via Yahoo! Singapore News)
TOKYO, July 27 - Sumitomo Mitsui Financial Group Inc. has agreed to buy a 31 percent stake in credit card firm OMC Card Inc. from retailer Daiei Inc. for about 75 billion yen , sources familiar with the matter told Reuters on Friday. ...more

Library references can help you repair credit score (The News-Press)
In today's depressed economy, millions of Americans are finding it difficult to maintain a high credit score. ...more

Toasting the Queen`s Birthday The British High Commissioner in Ghana, Gordon Wetherell (Accra Daily Mail)
Welcome to this reception to celebrate the birthday of Her Majesty Queen Elizabeth II in what is a special year for Ghana, and also for British/Ghanaian relations. ...more

Minorities likely to have higher mortgages (Connecticut Post)
DANBURY — Black and Hispanic residents are twice as likely to receive higher-cost mortgages than their white counterparts, according to an expert who spoke Wednesday during a ...more

Credit Repair and the Tools of Ignorance (Washington Post)
Every day, consumers pay untold sums to companies that promise a quick credit fix. Most of the time, that money is wasted. ...more