FOREX QUOTES, PIPS & SPREADS
The forex quote is a display of the bid and ask price at any moment in time.
EUR/USD 1.24/26.
The first price is the bid/sell and the second is the offer/buy.The forex quotes are often up to two or thee figures after the cent. The forex quote means that we can buy Euros in the forex market in exchange for dollars and pay 1.4126 Dollars for every Euro and we can sell Euros in forex market in exchange for Dollars at a rate of 1.4124 Dollars for every Euro.
The base currency is the first currency in the forex quote, in this example EUR. The second currency in the forex quote is relative to the base currency.
The price is in pips, Forex jargon for points. 100 pips is equal to 1c. Therefore the difference between the sell and buy is 2 pips.
The spread is the difference between the bid and ask, in our example it is 0.0002 cents or two pips, in the forex market spreads are usually very small. The close spreads combined with no commission and fluctuations averaging 100 pips a day makes forex trading easier to scalp i.e. find quick but small profits very often.
To make a profit on these small movements we need to leverage ourselves read on to find out how a 1c move can turn a 100% profit.