Before jumping into forex currency trading , the most crucial thing for any novice trader is to get the quality forex trading education so that he can be able to read the movement of currency pairs in forex exchange market and can able to extract valuable information from it. In forex trading online, forex education can help the trader to read the forex currency movements and it can also help him to make efficient, spontaneous and effective trading decisions. In this forex education tutorial, we will learn about forex currency trading quotes and about currency trading movement.
How a Trader should Read Forex Currency Trading Quotes?
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When trading in forex exchange market, it is important to understand that the currencies are always mentioned in pairs. It means that the value of the specific currency is always decided with respect to the value of another currency. For instance, consider EUR/USD as the first currency pair listed in the forex Market Watch Window. In this pair, the Euro (first currency) is also known as the “Base” currency and USD (second currency) is known as “counter” currency. In forex trading online , the most important forex currency trading pairs is EUR/USD, GBP, JPY, AUD, NZD and CAD.
Understanding Forex Currency Rates and their Movement
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Now we have learned about forex currency quotes and about important currency pairs, the next important step is to understand that what a rise and fall in a quote for a specific currency pair actually means. As the forex currencies are always quoted in pairs therefore, the rise in the base currency means that the trader have to spend more counter currency to purchase 1 of the first or the base currency. On the other hand, if the value of the specific currency trading pairs fall then it means that the trader have to spend less amount of counter currency in order to buy 1 of the first(base) currency.
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Understanding the Bid/Ask Spread in Forex Currency Trading
In forex trading online, every currency pair has always two types of prices i.e. the bid price and the ask price. The price at which the forex market maker will buy the currency is known as the bid price and the price at which the trader sell the currency is known as the ask price. Spread is another important term in forex trading system and it is generally referred as the net difference between the ask price and the bid price.