How to read currency price listings

Forex trading is about selling one currency and buying another one at the same time. Forex (Foreign Exchange), uses language not employed elsewhere in the investing domain. Defining those terms by example goes a long way toward removing the scary exotic mystique.

Currency dealing is always done in pairs. In other investments, such as shares, money is paid for a "physical" product (a percent of ownership, a promise to pay interest etc)

In Forex, money is traded for money. Euros are traded for dollars, dollars for yen, yen for euros etc. There are loads of trading currency pairs that take part in the currency exchange markets.

The primary players are US Dollar (USD), Euro (EUR), Australian Dollar (AUD), British Pound (GBP), Canadian Dollar (CAD), Japanese Yen (JPY) and Swiss Franc (CHF). Most daily deals involve trading in these currencies.

When reading quotes, you'll see prices listed as:

Name Bid Ask Change % Change High Low Time

EUR/USD 1.1901 1.1903 -0.0091 -0.76% 1.2024 1.1891 15:26

The currency listed on the left is called the 'base currency' (EUR) and the second is the 'quote currency' (USD).

The 'bid' is the price at which brokers are willing to buy the base currency. The 'ask' price is that at which brokers are willing to sell the base currency. The quotes are always listed from the brokers' standpoint. So if you want to buy the base currency the ask price applies. If you want to sell the base currency the bid price applies.

EUR/USD 1.1901/03 means

• If you buy 1 EUR you will pay 1.1903 USD


• If you sell 1 EUR you will receive 1.1901 USD

The difference between bid price and ask price at a single specific time is called 'the spread'. The spread is measured in pips (price interest points). The 'pip' is the smallest increment by which the price changes.

If the bid price of the EUR/USD pair changes from, say, 1.1901 to 1.1902 that's a single pip. That's a (bid or ask) price at two different times. Remember not to mix up this difference with the spread, which is a difference between the bid and ask price at a single, specific time.

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Forex website links

These links are to some new sites of mine. They're all about trading forex (currency) options and futures online.

They all have the same front page which is for a really good course you can buy on the subject that also offers a free basic guide.

To see site inner content go to the bottom left of page and click on the site map link.

They're what are known as portal sites whcích means some limited content with links or adverts going out to more specific sites on the subject of each page.

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http://www.greatoptionstrader.info
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http://www.thecommoditybrokernet.info
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http://www.fxtradersite.info
http://www.currencytradersite.info
http://www.forexsystemworld.info
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http://www.onlinefuturesworld.info

Choosing a Forex Broker

Choosing a good Forex broker can be as complicated. Here are some tips to keep in mind to make your research easier.

In the U.S., any worthwhile Forex broker will be registered as a Futures Commercial Merchant (FCM) with the CFTC (Commodities Futures Trading Commission).

Forex accounts are not FDIC insured, so you can’t expect the government to reimburse you if the market turns sharply downward. Large institutions, with capital to withstand downturns and en masse withdrawals are crucial to your financial peace of mind.

Forex is a 24 hours a day business so whether your broker resides in the same country or not, you want one who will pick up the phone when you call – anytime.

Regardless of the Internet it is still a phone heavy business. Getting a broker on the phone at anytime can mean the difference between profit and loss.

Research the firm's spreads. A spread is the difference between the bid and ask price - what the broker pays to buy versus the amount they sell a currency for.

Some brokers offer fixed spreads on all trades, which gives predictability. But that may not suit your trading style or budget, since they tend to be larger than variable spreads.

Any broker offers a standard account to a qualified client. Standard accounts trade currency in standard lots of 100,000 units. You can't buy 100 euros for $150, you have to buy 100,000 euros.

Since that's a very large investment brokers offer leverage. In other words you put in, say 1% of the total, the broker puts up the rest. That has huge profit (or loss) potential, but it entails significant risk. So be aware of a broker's margin call policy.

Many brokers offer some form of 'mini' account. They trade in smaller units, e.g., 10,000. This lowers the investment required from, say $2,500 to only $250.

Forex is very complex so you'll want a broker with software that provides you with lots of technical and fundamental analysis information at your fingertips.

Make sure they offer a trial account and that you can make paper or test trades. Very important if you are new.

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