Sunday, September 2, 2007

Forex Quotes

Quote: approximate market price.

Did you know: we all live in US dollar time. Why I think so? Because the US dollar is the base pair (currency listed first is the base currency) centerpiece of the Forex market and is normally considered the “base” currency for quotes. Main rule: first currency listed first is the base currency and value of the base currency is always 1. Quote currency is the second currency in the pair.
F.e. USD/CHF : 1,2160 . USD is base currency , and CHF is quote currency. 1,2160 – rate.

If a currency quote goes higher, that increases the value of the base currency and of course lower quote means the base currency is weakening. You also must know that currency pairs that do not involve the US dollar are called “cross currencies”.

Forex quotes always has 2 prices: “ask” (or “offer”) and “bid”. The “bid” is the level of price at which you can sell the base currency (and bank/broker buy it from you). The “ask” is the price at which you can buy the base currency. The spread is difference between the Bid and the Ask price.


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