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Real Time Fx Quotes – Analyzing a Forex Quote For New Traders
Beginners to the currency exchange trade would find analyzing a Forex quote daunting and puzzling task initially. In fact, this is the most frequent obstacle faced by beginners and it can perplex and confound them. Though the quote is short, it conveys a great deal of information. Although the quote does not make any sense for newbie, it is fairly easy to understand.
When you get a quote for Forex, it will always in for a pair of currency where one is exchanged in return of the other. The quote always comes with 2 prices, name the bid price and the ask price. One of the prices shows you how much you can sell a currency for, while the other shows you how much you can purchase a currency for. Let us take an example of a Forex quote. You may get a quote that comes to you as USD/JPY 106.52/56. In this example, the USD is known as the base currency, while the JPY is the quote currency. The base currency’s value is always fixed to 1 (in this example it is US$1), while the figure in the quoted currency actually gives you information on how many JYP you can purchase for a single US dollar. Real Time Fx Quotes
The figure 106.52/56 in the quote is an abbreviated form of 2 numbers, i.e. 106.52 and 106.56. The first number is the proposed price, while the second number is the demanded price. The first number shows how much a trader would be willing to pay for US dollar. The demanded price or quoted price shows you how much a trader will be willing to sell the same for.
Thus, when you see the Forex quote 106.52/56, it means that you can sell a single US for 106.52 JYP. Conversely, if you want to buy single US dollar, you should be willing to pay 106.56 JYP for the same.
The difference between the proposed price and the quoted price is known as the spread. And, each tiny unit (0.01) is called a pip. In the above mentioned example, the spread is four pips. In general, majority of the trading in the Forex Market takes place between US Dollar, Japanese Yen, Sterling Pounds, Euros and Swiss Francs. Real Time Fx Quotes
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