Reading Forex Quotes

Reading Quotes

Trading means obtaining something in exchange for another object. Trading involves dealing with pairs, so there is nothing to get confused about reading a currency quote such as USD/JPY and is literally the same as buying food in the restaurant with your money which can also be written as food / your payment. Getting something without giving is not a trade but a freebie so everything carrying the word trade means there are pairs involved so its not just for currencies.

When ordering at a restaurant you'll notice the price right next to the name of the food.
cheeseburger ............ $7.50

We can say that the cheeseburger is the good and its quote is $7.50
(cheeseburger / $7.50) if the payment is in Australian dollar then its cheeseburger / AUD ($7.50).
Currencies are no different, if we want to buy notes of the British Pound with our money, then we write it as GBP / our money or whichever currency you want as payment GBP / USD. In this case the price is expressed in US dollars since that is the money we'll use as payment for buying some Cable (Pounds).

Price Fluctuations

Determining whether a currency is weakening or strengthening against another isn't that confusing. We always buy whichever is rising in value, so in the EUR/USD pair, when the chart registers an uptrend that means the Euro is rising and the dollar is falling. When the chart is trending down in EUR/USD that means the euro is falling and the dollar is rising. So we buy the Dollar and sell Euros which translates to selling EUR/USD. If you flip that around (USD/EUR) it's still basically buying USD and selling EUR.

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