Exchange Rate - forex quotes (Module 1)
For rookies, forex is a shorter term used for foreign exchange. The term often used within the currency market, FX, or in currency trading. The forex market and its community have grown becoming the biggest investment market around the globe. In fact, it reached about $4 trillion in standard daily turnovers.
Despite that, you are to have basic insights as to how the trend line play. Upon years of observations and thorough analysis, we are to share with you how it works and how this represents the resistant areas to market prices.
The Forex Trading
Ideally, forex trading is the process of buying one type of currency and selling it onto another within the forex market. Whether you know it or not, currencies are significant to every individual around the globe.
Basically, currencies are necessary for conducting foreign trade and businesses. The world needs exchange currencies within the government and its people. That made Forex the biggest, well-known, and greatest liquidity globally.
Forex Exchange Process
The process of forex trade is similar to other online trading markets. The main difference is in forex traders are to buy a currency and sell another currency simultaneously.
Currencies are quoted in pairs. For instance, the EUR/USD (Euro to US dollar). Exchange rate indicates the cost amongst two currencies.
To explain further, the EUR/USD rate is the up to date amount of USD one EUR can purchase. Ideally, if the EUR price expects to increase against USD soon, traders purchase EUR with USD. Upon the expected increase traders are to sell EUR - making a profit in trade.
Again, currencies ALWAYS quoted in pairs. Look at the infographic below to learn how to read forex quote.
How to read Forex quote
Forex quotes include two prices, the bid and ask. At most scenario, the bid is often lower than the ask price. In layman's term, the bid is the amount that your broker is willing to purchase in the base currency in exchange in the quote currency. In short, the bid is the best price available you will sell into the market.
Meanwhile, the term ask is the amount your broker is willing to sell in the base currency in exchange in the quote currency. That means ask is the best available amount in which you can sell to the market.
Now the difference separating the bid and ask is called the "spread." We'll discuss that in the next chapter.
You've just made through our first chapter! One step forward now, keep learning, it'll help you for sure.
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