<\/strong><\/p>\n <\/strong>FX Quoting: Bid\/Ask and Spread<\/strong> A pip is the smallest value in a Forex quote. Take our example earlier on EUR\/USD. If the exchange rate goes from 1.2385 to 1.2386; that’s one pip. In mathematical definition, a pip means the last decimal place of a quotation. EUR\/USD 1.2385\/1.2390<\/strong><\/p>\n Base currency= Eur EUR\/JPY 127.95\/128.00<\/strong><\/p>\n Base currency= Eur GBP\/USD 1.7400\/10<\/strong><\/p>\n Base currency= GBP USD\/JPY 119.8<\/strong><\/p>\n Base currency= USD Reading Forex quotes is easy although it looks a bit confusing at the beginning There are sometimes that you can only see one price but often currency exchange price are display in pairs with ‘bid price and ask price’. Confused about the quotes? Don’t worry too much about it, you’ll get used to them as soon as you move on and start your trades.
\nCurrencies are always quoted in pairs. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX\/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed.
\nThe first currency in the quotes act as the ‘base currency’.<\/strong><\/p>\n
\nFor example USD\/JPY, EUR\/GBP, and GBP\/AUD, in such cases, USD, Euro Dollar, and Britain Pound are acting as the base currency. Base currency in a Forex quote will always has a value of 1. USD\/JPY indicates how much Japanese Yens you can buy with 1 United States Dollar; similarly EUR\/GBP indicates the exchange rate of Great Britain Pound with 1 Euro Dollar.<\/strong><\/p>\n
\n <\/strong>
\nThere are sometimes that you can only see one price but often currency exchange price are display in pairs with ‘bid price and ask price’.
\nFor example EUR\/USD 1.2385\/1.2390, 1.2385 is known as the bidding price, while 1.2390 is the asking price. Bidding price is the price that you sell the base currency (EUR in our case here); asking price is the price that you buy the base currency. The different of the bidding and the asking price is called ‘spread’.
\nYou might notice that bidding price is always lower than the asking price. Ever wonder why? The different of the bid-ask price (socall ‘spread’) is how currency brokers make profits without charging commissions to their clients (sell high and buy low in the same time<\/p>\nWhat’s a pip?<\/strong><\/h3>\n
\nNote that as each currency has its own value, the value of a pip is different from one another. Say USD\/JPY rate at 120.75, a pip would be 0.01 (the second decimal place); while for EUR\/USD 1.2385, a pip would be 0.0001 (the fourth decimal place).<\/p>\nExample of Forex Quotes<\/strong>
\n <\/strong>
\nConfused about the quotes? Don’t worry too much about it, you’ll get used to them as soon as you move on and start your trades.
\nFor the beginners, here are some quick examples. Try not look at the answer and determine the value of bid price, ask price, spread value, and the pip value.<\/h3>\n
\nBid price= 1.2385; Ask price= 1.2390
\nWhen selling Euros, 1 Euro = USD$1.2385; when buying Euros, USD$1.2390 = 1 Euro.
\nSpread = 1.2385 – 1.2390 = 0.0005
\nPip value= 0.0001<\/p>\n
\nBid price= 127.95; Ask price= 128.00
\nWhen selling Euros, 1 Euro = JPY127.95; when buying Euros, JPY128.00 = 1 Euro.
\nSpread = 127.95 – 128.00 = 0.05
\nPip value= 0.01<\/p>\n
\nBid price= 1.7400; Ask price= 1.7410
\nWhen selling Pound, 1 Pound = USD$1.7400; when buying Pound, USD$1.7410 = 1 Pound.
\nSpread = 1.7400 – 1.7410 = 0.001
\nPip value= 0.0001<\/p>\n
\nNo bid-ask price is displayed, spread value not available.
\nPip value= 0.1
\nGetting used to the quotes now? Well, don’t feel down if you’re still slow… you’ll be picking up on reading them as you move along.<\/p>\n
\nCurrencies are always quoted in pairs. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX\/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed.
\nThe first currency in the quotes act as the ‘base currency’.
\nFor example USD\/JPY, EUR\/GBP, and GBP\/AUD, in such cases, USD, Euro Dollar, and Britain Pound are acting as the base currency. Base currency in a Forex quote will always has a value of 1. USD\/JPY indicates how much Japanese Yens you can buy with 1 United States Dollar; similarly EUR\/GBP indicates the exchange rate of Great Britain Pound with 1 Euro Dollar.<\/p>\nFX Quoting: Bid\/Ask and Spread<\/h3>\n
\nFor example EUR\/USD 1.2385\/1.2390, 1.2385 is known as the bidding price, while 1.2390 is the asking price. Bidding price is the price that you sell the base currency (EUR in our case here); asking price is the price that you buy the base currency. The different of the bidding and the asking price is called ‘spread’.
\nYou might notice that bidding price is always lower than the asking price. Ever wonder why? The different of the bid-ask price (socall ‘spread’) is how currency brokers make profits without charging commissions to their clients (sell high and buy low in the same time<\/p>\n","protected":false},"excerpt":{"rendered":"
\nFor the beginners, here are some quick examples. Try not look at the answer and determine the value of bid price, ask price, spread value, and the pip value.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[140,5],"tags":[],"class_list":["post-98","post","type-post","status-publish","format-standard","hentry","category-forex","category-stocks-101","wpcat-140-id","wpcat-5-id"],"_links":{"self":[{"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/posts\/98","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/comments?post=98"}],"version-history":[{"count":0,"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/posts\/98\/revisions"}],"wp:attachment":[{"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/media?parent=98"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/categories?post=98"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stocks-shares-news-alert.com\/stock-market-news\/wp-json\/wp\/v2\/tags?post=98"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}