How to Read a Currency Quote

Reading a currency quote is one of the most important things that you will have to learn how to do if you plan on getting involved in the Forex market. Every time that you want to buy or sell foreign currency pairs, you are going to have to understand how to read a quote. Here are the basics of how to read a currency quote in the Forex market.

Finding Currency Quotes

In order to read the quotes, you are going to have to know where to look. If you are trading, you can easily pull up your trading platform on your computer in order to get up-to-the-minute currency quotes. If you are using the popular Metatrader platform, you should be able to look on the upper left corner of the screen to find currency quotes. You should be able to see several different currency pairs there. You should be able to scroll up and down in order to find a specific currency pair quote. 

Currency Pairs

When you are looking at your trading platform, you will immediately notice that currencies are listed in pairs. When you place a Forex trade, you are always going to have to work with two currencies simultaneously. You are always buying one currency and selling another. You are essentially placing a bet on what is going to happen in the relationship between the two currencies that you are working with.

Base Currency

The first currency listed in the pair is known as the base currency. For example, if you were looking at the EUR/USD pair, the base currency would be the Euro. 

Quote Currency

The second currency that is listed in the pair is known as the quote currency. In the example of the EUR/USD, the quote currency would be the United States dollar. 

Reading the Quote

Looking at a Forex quote is essentially going to provide you with the exchange rate between the two currencies. For example, let's say that you saw a Forex quote that said EUR/USD = 1.0048. This would mean that in order to get 1 Euro, you are going to have to pay 1.0048 United States dollars. If you looked at a quote that said USD/JPY = 118.58, this means that you would have to provide 118.58 Yen to get 1 United States dollar. 

Bid and Ask

The above example was a simplified example when it comes to the Forex market. In reality, when you are working with a broker, it is going to be a little bit more complicated than that. You are going to see two prices at the same time. The first one is going to be the bid price and the second one is going to be the ask price.

For example, let's say that you saw a Forex quote that said EUR/USD = 1.0048/1.0053. This means that if you want to buy the Euro, you are going to have to pay 1.0053. If you want to sell a Euro, you will get 1.0048 dollars. 

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