How to Read and Understand Forex Quotes

How to Read and Understand Forex Quotes

Forex quotes are among the most difficult concepts for many newbies. The flashing letters of different currency pairs can overwhelm you. 

Luckily, once you understand the basics, interpreting and understanding quotes becomes second nature. 

The first vital point is: each Forex quote has two currencies. Trading means buying one currency while selling the second currency simultaneously.

When interpreting a Forex quote, the first currency is the base currency. The second currency is the quote currency. Forex quotes show the price gap between both currencies.

Direct and Indirect Quotes

A direct quote for UK traders trying to buy dollars will be EUR/GBP. Its relevance to UK citizens is based on the GBP quote. This direct quote shows the price of 1 Euro against the British Pound.

An indirect quote is the opposite of a direct quote. You can determine the indirect quote by using 1 to divide the direct quote. For instance, a direct quote of 4.212 equals an indirect quote of 0.237.

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