FOREX Trading
• What Is
FOREX?
• FOREX
Or Futures?
• FOREX
Or Stocks?
•
FOREX Trading for
Beginners
• FOREX
Terms To Know
•
Preparing for FOREX
Trading
• Is
FOREX Trading Risky?
•
The Philosophy of FOREX
Trading
•
FOREX and Fundamental
Analysis
•
Tools for FOREX Trading
•
Trading Strategies for
FOREX
• Trading Systems
for FOREX
•
Reading and Understanding
FOREX Quotes
•
FOREX Profits and Losses
•
FOREX Technical Analysis
Part 1
•
FOREX Technical Analysis
Part 2
•
FOREX Trading Brokers
• The
FOREX Margin
•
What Are Currency Options?
•
What Are FOREX Signals?
|
Online FOREX Trading
Reading and Understanding FOREX Quotes
If you've had an interest in FOREX, taken a look at the quotes, and run away,
don't feel bad. Many other people do the same thing. FOREX quotes are, at
best, confusing. But it is vital that you understand how to read those quotes
before you start investing in FOREX.
There are numerous factors that affect the price of a currency. Events, economic
conditions, and political situations seem to have the largest affect on those
prices. It seems that everything matters. In fact, a government can control
the price of their currency by either flooding the market with the currency,
or by buying a great deal of their own currency to lower or raise the current
price of that currency.
Fortunately, for FOREX traders, the FOREX market is too extensive for any
government to control a price for very long. This makes FOREX one of the
safest and fairest investments available. Each currency is given a three
letter code, which you will see when you are looking at FOREX quotes. For
instance, the US Dollar is represented by USD, the European Euro by EUR,
the United Kingdom Pound by GBP, the Australian Dollar by AUD, the Japenese
Yen by JPY, the Swiss Franc by CHF, and the Canadian Dollar by CAD.
In FOREX quotes, the prices are given in pairs of currencies. A currency
pair is two different currencies, such as the USD and the EUR, represented
as USD/EUR. In this example, the USD would be the base currency, and the
EUR would be the quote currency. For example, USD/EUR = 0.8591. This means
that one US dollar will cost 0.8591 Euros.
If the pair was the opposite way: EUR/USD = 0.8591, it would mean that one
Euro would cost 0.8591 US Dollars. If the quote currency rises, it means
that the base currency is becoming stronger, or worth more. If the quote
currency drops, it means that the base currency is becoming weaker - worth
less.
FOREX quotes are given in bid and ask prices. The bid price is the price
that a buyer will pay for the base currency, in exchange for the quote currency.
The ask price is what the sellers are willing to sell the base currency at,
in exchange for the quote currency.
There are major and minor currencies, and major currency pairs, as follows:
GBP/USD, EUR/USD, AUD/USD, USD/JPY, USD/CHF, and USD/CAD. You may see cross
currency charts as well, which show several different currencies, such as
this:
|
USD |
CAD |
EUR |
GBP |
| USD |
1.01285 |
1.36050 |
0.98735 |
0.46578 |
| CAD |
0.70808 |
1.00000 |
0.57756 |
0.36759 |
| EUR |
1.29140 |
1.48105 |
1.00000 |
0.57699 |
| GBP |
1.76985 |
2.29080 |
1.67984 |
1.00900 |
When viewing such a chart, the currencies listed across the top are the quote
currencies, and the currencies listed on the left are the base currencies.
You can form pairs from this currency chart as follows:
USD/CAD = 1.36050
USD/EUR = 0.98735
USD/GBP = 0.46578
From this, you can see what the US dollar is worth in various different
currencies. Because there is no standard for cross currency charts, it is
necessary to already know what one currency pair is, so that you can determine
how to read the chart.
|