Trading foreign exchange on forex market can be a great source of investment income. Putting it into perspective, the securities market trade about $22.4 billion dollars daily; the forex market trades about $ 5 trillion daily. With this information, it is believable that there is a lot of money to go round. One thing to consider is predicting the direction of the market; this can be a real rush. Traders are expected to understand the functionality of the forex market, which can be a real rush a lot of time, but that is the price that must be paid if success is the aim. Talking about understanding the functionality of the forex market, one way to do that is keeping in constant touch with forex live quotes regarding the currency pair being traded and other important ones as well, like the majors.
WHAT IS A FOREX LIVE QUOTE?
A forex live quote is a display of the real time price of currency pairs in the forex market. With this quotes, a trader can see it the second there is the slightest change in the currency pairs. This is very beneficial to trader, especially the types that indulge in trades that last as long as five minutes.
In a real time forex quote, one will see different numbers on display, all of which are grouped into two different categories; the bid price category and the asking price category. The bid price is usually on the left, while the ask price on the right.
To understand live forex quotes, on need to understand the following terms associated with trading a currency
- CURRENCY PAIR:
All forex trades are conducted in currency pair which consists of a base currency and a quote currency. The base currency is always the first currency and it has an assigned value of one. For every one of this, one could buy X of the quote currency. The quote currency is always the second currency. It would cost X of this to buy 1 of the base currency.
This shows two prices; the highest bid price and the lowest ask price for the currency pair. Te highest price shown depicts the costliest a currency pair can be at that particular time, while the lowest price depicts the least amount the currency pair is worth.
- BID/SELL PRICE:
The bid price is the best price at which one can sell a currency pair. It is always lower than the best price at which one can buy it (ask price). Bid price of a currency pair differ from one investor to the other.
- ASK/BUY PRICE:
The ask price is the best price at which one can buy A currency pair. It is always higher than the best price at which one can sell it (the bid price).
This is the difference between the bid price and the ask price. The spread is the reason that as soon as one places a trade, his profit and loss will immediately be negative. The reason is that the price at which one can buy is always higher than the price at which you can sell and vice versa.
In conclusion, it is advisable to check the latest prices or use live forex charts to help in making trading decisions and in taking advantage of the liquidity in the foreign exchange.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.