These are actually currency pairs. A currency pair is a way of showing the relationship between two currencies. You get the picture. The next part of the Forex quote consists of a set of numbers.

Pips - Forex Pips

Now these numbers are the bid and ask price of the currency pair. In simple terms, one is the price that you will pay for the currency and the other is the price you would get when selling the currency. Now to put things into perspective, sometimes you will only see one number when seeing foreign exchange quotes.

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In the currency pair, the currency that falls to the left of the slash, is the base currency, while the currency on the right is the counter currency Also known as the quote currency. When using quoting forex, the base currency is always 1 unit, while the counter currency shows how much of that currency would be equal to 1 unit of the base currency. This means that it will take 1. In Forex, there are two main ways that you can quote a currency pair.

Difference Between Base and Quote Currency

You can do so directly or indirectly. The direct quote is one where the domestic is the quoted currency pair. The indirect quote is where the base currency. For most of the Forex spot market, which is what retail traders like us trade, many currency pairs are written with the US dollar being the quoted currency counter currency.

Now, as we mentioned briefly before, when viewing forex quotes live you will notice that instead of one price there are two, the bid and ask price. To put matters simply, the bid price is the price that you will buy at and the ask price that you will sell at. Of course, these are in the base currency of the currency pair that you are using. Ok, here comes the slightly confusing part.

When you are buying in the market, the ask price is the price that you have to pay in order to buy one unit of the base currency. It is ok to read that over again. Remember that Forex stands for Foreign Exchange, so this means that if you are buying one currency, you have to sell another currency in order to get it.

Now if I wanted to sell go short , then we would focus on the bid price. This price shows how much of the quoted currency you will gain if you sell a unit of the base currency. You could also look at it as the price that the market will pay you in quoted currency for selling the base currency. Forex quotes reflect the price of different currencies at any point in time.

Currency quotes explained in Forex

A forex quote is the price of one currency in terms of another currency. These quotes always involve currency pairs because you are buying one currency by selling another. Brokers will typically quote two prices for any currency pair and receive the difference spread between the two prices, under normal market conditions. The following sections will expand on the different aspects of a forex quote.

The same quote will be used throughout this piece to keep the numbers consistent. This example is presented below:. In order to read currency pairs correctly, traders should be aware of the following fundamentals of a forex quote:. Base currency and variable currency: Forex quotes show two currencies, the base currency, which appears first and the quote or variable currency, which appears last.

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The price of the first currency is always reflected in units of the second currency. This is unusual as you cannot physically hold fractions of one cent but this is a common feature of the foreign exchange market.

The bid SELL price is the price that traders can sell currency at, and the ask BUY price is the price that traders can buy currency at. Traders will always be looking to buy forex when the price is low and sell when the price rises; or sell forex in anticipation that the currency will depreciate and buy it back at a lower price in the future.

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The price to buy a currency will typically be more than the price to sell the currency. This difference is called the spread and is where the broker earns money for executing the trade. Spreads tend to be tighter less for major currency pairs due to their high trading volume and liquidity. This direct quote will provide US citizens with the price of one Euro, in terms of their home currency which is 1.

It shows the value of one unit of domestic currency in terms of foreign currency. Indirect quotes can be useful to convert foreign currency purchases abroad into domestic currency. DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances. Forex trading involves risk. Losses can exceed deposits. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading.

Sign up now to get the information you need! Receive the best-curated content by our editors for the week ahead. By pressing 'Subscribe' you consent to receive newsletters which may contain promotional content. Check your email for further instructions. Live Webinar Live Webinar Events 0. Understanding how to read forex quotes is useful when you are trading.



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We traders thrive on perfecting and being fluent in the language of financial markets. Many beginners in forex trade might believe that the language is daunting, yet that is far from the truth. Learning forex quotes is intuitive and requires minimal mental effort. The currency on the left side before the slash is what we call the base currency and the currency on the right side is called the quote currency or counter currency in other layman term.

So if you were to buy currency, then immediately sell it back to the same dealer, the dealer would make money, and you would lose money.

Forex Quotations Explained

Forex Quotes are given in order to assess the number of units in term currency or price currency which can be bought as base currency or in terms of 1 unit currency. Before trading currencies an investor has to have a deeper understanding about the basic terminology of the forex market, including how to trading simulator understand the forex quotes. In a typical and common foreign exchange transaction an investor is simultaneously buying one currency and selling another.

These two currencies are what comprise what we call a currency pair. In order to understand it better, you should always remember two important things. Single Blog Title This is a single blog caption. Forex Trading For Beginners. Intro To Options. About Post Author. Ha sede in Spoleto PG , ma opera in tutto il territorio regionale grazie alla collaborazione stretta con partners locali.

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