Lesson 3: Reading a Forex Quote

To make a profit in the Forex market, you must first figure out how to read your figures. We promise it is simple and easy. Just ask yourself three questions and follow an example below:

E.G. EURUSD@1.21759/1.21847

Question 1. Look at EURUSD. Do you want to buy or sell this pair?

Automatically you should recognize that EUR is the base currency, and USD is the quote currency. If you buy EURUSD, you long (buy) EUR and short (sell) USD. If you sell EURUSD, you short EUR and long USD.

Question 2. What price are you buying / selling?

The bid price, 1.21759, is the best and highest price you call sell the currency pair; sell EUR 1 for USD 1.21759.

The ask price, 1.21847, is the best and lowest price you can buy the currency pair; buy EUR 1 for USD 1.21847.

Question 3. What is the bid-ask spread?

1.21847–1.21759=0.00092

The spread of this quote is 9.2 pip.

Pip is a standardized unit used to measure the forex changes. It is the smallest price change a pair can make, which is the 4th decimal place for most pairs, but the 2nd decimal place for JPY yen pairs.

Proceed to the next lesson to get better grasp on forex terms, such as ‘spread’, ‘pip’ and more.

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