Forex Platforms

Reading a Forex Quote

If you want to be involved in foreign exchange trading, it is important that you understand how to read a forex quote. Foreign currency rates will help you decide how a currency pair is moving, and provide you with insight as to where to enter or exit a position. Knowing how to read quotes on the forex market are important if you expect to improve as a trader and earn profits. Many companies, like dbFX, that provide a forex platform, also provide live quotes and currency rates that can help you see how your foreign currency pairs are doing – and help you make your next move.

Reading an FX quote

First, it is important to understand that currencies are always traded in pairs. The exchange rate is expressed as a number that represents the values of two currencies in relation to each other. Using the euro exchange with the U.S. dollar, we can look at an example of how it works to read a forex quote.

The euro/dollar pair is often expressed thus: EUR/USD 1.4100 The first currency listed in this pair, the euro, is referred to as the base currency. The second currency in this pair, the U.S. dollar, is known as the quote currency (sometimes it is called the counter currency). The number represents the “value” of the pair. The base currency sets the tone for the pair, and is valued at one. In our example, it takes US$ 1.41 to equal one euro. The euro is valued more highly. As perception of the euro’s value against the dollar rises or falls, the currency pair moves up or down. If you feel that the euro will move higher in currency trading, then you enter a position that favors EUR/USD. If you feel the euro will weaken against the dollar, you “short” the position, expressing your view that EUR/USD will fall on the forex market.

It is relatively easy to read a forex quote, and online trading makes it easier for you to take advantage of real time information. Forex brokers like dbFX can help you use a forex trading platform to analyze quotes so that you can enter and exit positions at points that are more likely to bring you profit.

Tags: dbFX, Forex Platform, Forex Quote