The object of FOREX trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold.
An example is making money by buying euros. You purchase 10,000 euros at the EUR/USD exchange rate of 1.18. Since the exchange rate is 1.18, you spend $11,800. Two weeks later, you exchange your 10,000 euros back into US dollars at the exchange rate of 1.25. Hence, you earn $12,500 and have a profit of $700.
How to Read an FX Quote
Currencies are always quoted in pairs, for example GBP/USD or JPY/PHP. They are quoted in pairs because in every foreign exchange transaction you are simultaneously buying one currency and selling another.
An example is: GBP/USD = 1.7500
The currency listed to the left of the slash (“/”) is known as the base currency (in this example, GBP or the British pound), while the one on the right is called the counter or quote currency (in this example, USD or the U.S. dollar). The exchange rate (1.7500) tells you how much you have to pay in units of the quote currency to buy one unit of the base currency when buying. Or how many units of the quote currency you get for selling one unit of the base currency when selling.
First, you should determine whether you want to buy or sell.
If you want to buy, you want the base currency’s value to rise and then you would sell it back at a higher price. If you want to sell, you want the base currency to fall in value and then you would buy it back at a lower price.
Related posts:
- Forex Trading: Currency Exchange Tutorial So, you want to learn how to trade currency...
- Currency Trading Tutorial – Forex for Beginners What Is A Currency Pair? A currency pair...
- Make Money Trading Currencies – What Are the Basic Tricks? The Forex market is a place where investors can...
- Travel Money –Save Time and Save Money By Buying Foreign Currency Online Whatâs the Foreign Currency Exchange? So what is the...
- Basics of Trading the Forex Market: FX Terminology Price Quotes: Base Currency / Quote Currency All transactions...
Related posts brought to you by Yet Another Related Posts Plugin.
Tags: