Excerpt from: Forex Training
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| January 26, 2009 | | Currency trading takes place in pairs |
When you start forex trading, it is very important to understand the basic mechanics of how the whole process works. One of the most important things to understand about currency trading is that it takes place in pairs.
Reading a quote on a currency pair
When reading a forex trading price quote, realize that the currency listed first in the pair is what is being represented. For example, in the EUR/USD pair, if the quote is 1.3385, it means that the euro is worth close to $1.34. If the USD/JPY currency pair is at 89.45, it means that $1 will buy nearly 89 and a half yen.
If a pair is said to be gaining, it means that the first currency listed in the pair is gaining over the second pair. In currency pairs, one currency is always gaining in relation to the other.
Currencies: Gaining and losing at the same time
Because each currency pair represents its own trade, it is important to note that a single currency can be gaining and losing at the same time. Each currency pair represents a different set of circumstances. The EUR/USD can be losing ground while EUR/GBP is gaining. The euro can be losing value against the U.S. dollar at the same time that it is gaining value against the Great Britain pound.
This is important to remember, since it means that you will have to understand the merits of each different currency pair, and understand how the currencies interact with each other.
| Topic Tags: currencies, currency pairs, currency trading, EUR/USD, forex, forex basics, forex trading, forex training, USD/JPY | |
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