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BASICS OF FOREX – THE QUOTE SCREEN
The Basics Of Forex when looking at a Quote screen
are essential and after a while they are easy to understand when they are
explained in simple terms.
Currency Pair – All Forex trades are conducted
in a Currency Pair which consists of a Base Currency and a Quote Currency
Base Currency – The Base Currency is always
the 1st currency and it has an assigned value of 1 – For every 1 of these you
could BUY X of the Quote Currency
Quote Currency – The Quote Currency is always
the 2nd currency – It would cost you X of these to BUY 1 of the Base Currency
Quote/Rate – This shows two prices – The
highest Bid Price and the lowest Ask Price for the Currency Pair
Bid (SELL) Price – The Bid Price is the best
price at which you can SELL this Currency Pair – It is, obviously, always lower
than the best price at which you can Buy it (the Ask Price)
Ask (BUY) Price – The Ask Price is the best
price at which you can BUY this Currency Pair – It is, obviously, always higher
than the best price at which you can Sell it (the Bid Price)
Spread – The difference between the Bid
Price and the Ask Price
IMPORTANT: The Spread is the reason that,
as you soon as you place a trade, your Profit & Loss will immediately be
negative. This is because the price at which you can BUY (the Ask Price) is
always higher than the price at which you can SELL (the Bid Price) and vice
versa.
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