Stock Trading Education » business section http://halleducation.com Lean how to trade stocks the right way Mon, 05 Jul 2010 02:23:22 +0000 en hourly 1 http://wordpress.org/?v=abc Making Sense of Foreign Currency Trading Quotes http://halleducation.com/making-sense-of-foreign-currency-trading-quotes/ http://halleducation.com/making-sense-of-foreign-currency-trading-quotes/#comments Thu, 10 Dec 2009 15:25:31 +0000 admin http://halleducation.com/?p=22 Are you one of those people who feel instantly dizzy just by looking at numbers?  Isn’t it a waste that you buy a newspaper and never touch the business section?  It’s not that you are not interested in it, contrary to that, you may have been meaning to go through the pages a long time ago, wanting to try making sense of them.  The thing is, your brain just seems to go on automatic “shut-down” when it comes to seeing foreign currency figures.  Well, if there is a will, there is a way.  Read through and realize that learning about the basics of foreign exchange isn’t really that hard.  You really just have to start, and this is a good way to do it.

First thing you must learn is how to read foreign currency trading quotes.  These quotes always show up in pairs.  For example, a quote may read like “EUR/USD.” In this example, the first currency is called the base currency, and the second one is called the pricing currency.   In trading foreign currencies, you are always buying and selling the base currency. For example, 1 Euro = 1.4962 U.S. dollars. This means that you are selling or buying one Euro for the amount of 1.4962 U.S. dollars.  Usually, it is the US dollar that is the base currency when it comes to evaluating other currencies.  For instance, you may see quotes that go like “USD/CAD” (US Dollar/Canadian Dollar) or “USD/JPY” (US Dollar/Japanese Yen).  This does not necessarily mean though that the US dollar is the highest of all currency values.  Somehow, it is just a lot easier to understand when you use the US dollar as the standard because everyone is familiar with it.  However, when it comes to trading Euro (EUR), British pound (GBP), and Australian dollar (AUD), they all come as the base currency before the US dollar.  For example, the quotes would read as EUR/USD, GBP/USD, and AUD/USD.

While you are trading foreign currencies, you will hear frequently-used terms like rising quote or weakening quote. A rising quote means that the base currency has appreciated.  This means that you can buy more currency with it.  A weakening quote, on the other hand, means that you can buy less currency with it. Another term you may hear is cross currencies.  This simply refers to trading quotes that do not involve the dollar.   For instance, in trading Japanese Yen and Swiss Franc (CHF), the quote would read as JPY/CHF with the Yen as your base currency.

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