How to Read the Forex Quote While Trading in Forex Market

How to Read the Forex Quote While Trading in Forex Market

To have a better insight about currency exchange rate and how it affects the value of your Forex investment, we will discuss everything about Forex Quote in this article.
As a Forex trading broker you have to basically understand that cumulative buying and selling of a currency in the Forex market causes the value of investment to fluctuate. Meaning, it may either go down or move up because of cumulative buying and selling that takes place in the Forex market.

There are many factors that are responsible for causing such fluctuations in exchange rate. Factors like, political and social or fundamental economic environment of a country, central banks fiscal policy of these countries, interest rate adjustment etc to are some of the popular factors.

Currencies are traded in pairs and each currency has its own symbol. For the Euro 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/USD would be pounds Sterling-Dollar pair and USD/CHF would be Dollar-Swiss Franc pair and so on and so forth.

You will always see the USD quoted first (with exceptions like Pounds Sterling, Euro Dollar, Australia Dollar (AUD) and New Zealand Dollar (NZD). The first currency quoted is called the base currency and the U.S. dollar is regarded as the central currency of the Forex market and it is part of majority of the forex transactions happening across the globe.

So now coming back to our basic lesson - how are these currency pairs quoted on the Forex market and how to read the quotes? The Forex trader will see two distinct numbers on all Forex quotes. The first one is the bid and the second is offer or asking price.

When you are reading these numbers you will notice that there exists a difference between the bid and the offer price. This difference is what is termed as the spread.

There is another popular term that you will come across called Pip. Pip is the way by which currency profit is measured. PIP stands for price interest point.

The single most important objective of a Forex Trader is to book profits from currency movements and fluctuations in the foreign exchange market. Along with the risks, even the rewards of trading in Forex are huge and the amount of money a Forex trader can earn can be life changing and may ultimately lead you to achieve financial freedom that you never even dared to dream of.

But to get there you will require continuous and in-depth understanding and training in Forex. This may include understanding fundamental analysis, technical analysis, chart pattern and formation, trade management, risk management such as stop loss and profit target and finally money management - trading beyond your means is assign of bad money management and can ruin you to the extent that may take you long to recover from. But if you can get the right Forex Trading knowledge, you will enjoy long term currency trading success and build wealth of a lifetime.