We will be relaxed in this class, because it is very easy to read forex quotes. It did not take long to understand it. It should be noted, forex quote is always changing to follow the market every time.
Reading forex quotes is very simple. There are two things to note. First, the first currency listed is the base currency. For example, EUR / USD, GBP / USD, AUD / USD. The first currency (EUR, GPB, and AUD) is the base currency. And the value of the base currency is 1.
Look at image below !.
Above is a graph of GBP / USD, at the time, GBP / USD = 1.5364, that means 1 GBP = 1.5364 USD. Remember, the base currency value is 1.
Now we discuss about the SPREAD. Spread is generated from the difference between selling price (ask) and buying price (bid). Since every currency pairs showing buying price (bid) and selling price (ask). Each spread is determined by the broker, and has the differences between one another. if the spread is smaller, then the better. Why? It is a fact. When you open a transaction, it will not be at the point 0, but the starting point is determined by the spread itself. If these pairs have spreads 3, then the initial value of your trade will be at the point of -3, spread 5 = -5, spread 10 = -10. That's why I say that the spread is smaller, then the better. So, choosing a broker that have a small spread, that will be better
How do I know the spread of any currency pairs? Easy, use a mathematical formula like this: Ask - Bid.
Try to guess, which pairs that have the smallest spreads and the biggest? It is your task in class today, knowing the spread in order to consider before you open the transaction.
Just a suggestion, for a newbie, try to open the transaction in pairs that have spread under 3. It will assist you in trading psychology. Currently, my broker is InstaForex. InstaForex have much smaller spreads, such as EUR / USD = spread 3.
Reading forex quotes is very simple. There are two things to note. First, the first currency listed is the base currency. For example, EUR / USD, GBP / USD, AUD / USD. The first currency (EUR, GPB, and AUD) is the base currency. And the value of the base currency is 1.
Look at image below !.
Above is a graph of GBP / USD, at the time, GBP / USD = 1.5364, that means 1 GBP = 1.5364 USD. Remember, the base currency value is 1.
Now we discuss about the SPREAD. Spread is generated from the difference between selling price (ask) and buying price (bid). Since every currency pairs showing buying price (bid) and selling price (ask). Each spread is determined by the broker, and has the differences between one another. if the spread is smaller, then the better. Why? It is a fact. When you open a transaction, it will not be at the point 0, but the starting point is determined by the spread itself. If these pairs have spreads 3, then the initial value of your trade will be at the point of -3, spread 5 = -5, spread 10 = -10. That's why I say that the spread is smaller, then the better. So, choosing a broker that have a small spread, that will be better
How do I know the spread of any currency pairs? Easy, use a mathematical formula like this: Ask - Bid.
Try to guess, which pairs that have the smallest spreads and the biggest? It is your task in class today, knowing the spread in order to consider before you open the transaction.
Just a suggestion, for a newbie, try to open the transaction in pairs that have spread under 3. It will assist you in trading psychology. Currently, my broker is InstaForex. InstaForex have much smaller spreads, such as EUR / USD = spread 3.
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