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Thread: Reading Forex Quotes

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    Default Reading Forex Quotes

    To a newcomer in the world of trading, forex quotes can be confusing. But they are actually quite simple to read.
    Lets look at an example of what a foreign exchange rate quote looks like: EUR/USD = 1.2526

    Seems simple enough, right? This example shows the foreign exchange rate between the Euro and the US Dollar.
    It helps to remember that in any forex quote, there will always be two currencies quoted. This is because when you make a trade on the foreign exchange you are in effect buying one currency and selling a second currency at the same time.

    When reading forex quotes, the first currency listed is called the base currency. The second currency listed is called the quote currency. Forex quotes
    show us the price relationship between two currencies.
    The exchange rate tells you how many units of the quote currency you have to pay in order to get one unit of the base currency.

    In the example above, the base currency is the Euro and the quote currency is the US dollar. The price quote tells us how each currency is trading relative to the other. In order to buy one unit of Euros you will have to sell 1.2526 units of US Dollars.

    Still with me? Ok, just one more thing to add to our example: the Bid/Ask spread.

    There are no commissions charged on any trades placed in the forex market. But brokers do get paid for their work through the bid/ask spread.

    Lets add the spread to our example and Ill explain:

    EUR/USD = 1.2526/1.2528

    Or, this can be simplified to:

    EUR/USD = 1.2526/8

    Brokers make their money by selling currencies at a slightly higher rate than they buy them. This is perfectly legal and all brokers do it, though the amount of the spread can vary.

    As a trader, you will buy at the bid price, which is the first price quoted. You will sell at the ask price, which is the second price. The difference between the prices is called the spread, which is retained by the broker as their profit on the trade.

    In our example, you would buy at 1.2526 and sell at 1.2528. The 0.0002 (2 pips) would go to the broker as payment for executing the trade.

    The bid/ask spread is a simple and straightforward way to calculate trading fees and expenses.
    by forexgates.com

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    Default

    its important to take in note the brokers spreads or the pair while looking at qoutes

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    well diffrent brokers have different qoutes
    and so u need to check that befor trading

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    Default Macd

    Developed by Gerald Appel, Moving Average Convergence/Divergence (MACD) is one of the simplest and most reliable indicators available. It is calculated by plotting the difference between two moving averages and then adding another moving average to the difference. Like most technical indicators, these tools are meant to help us time our entry rather than predict where the market will go. Here is a daily chart of the USD/JPY with an MACD plotted with the common values of 12,26,9. You can see that the crossovers of the MACD line and the MACD Signal Line, which is the moving average of the MACD, offered good entries for selling opportunities. However, the key here and with all technical indicators is that we are only taking the sell signals since the direction of the daily trend is down. So we look to sell rallies up to a resistance level in this downtrend. After that happens, we can see the crossover and the subsequent selling pressure which could have led to winning trades. One of the keys to increasing your chance of success on these setups is to place your protective stop above the high after entry and then to look for twice that risk in profit potential for your 1:2 risk:reward ratio. If you are risking 100 pips, look for at least 200 pips in profit. These setups on the daily chart can be solid about half of the time, so you have to make sure the losing trades do not keep you from being profitable in the long run. Using a 1:2 risk:reward ratio can be the difference.
    Attached Thumbnails Attached Thumbnails MACD.jpg  

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    Default

    yes you are very right that these numbers should a trader understand because it is very basic and one must know about this.

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    Default

    Before trading currencies an investor has to understand the basic terminology of the Forex Market, including how to interpret Forex quotes..D

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