How to understand a FOREX quote?
FOREX is quoted in currency pairs, such as GBP/USD or USD/JPY.
Take GBP/USD for example:
- BUY GBP/USD = 1.33722
- SELL GBP/USD = 1.33704
The currency to the left of the slash ("/") is called the base currency (the pound in the example), and the currency to the right is the counter currency (the dollar in the example).
When you buy, the FOREX rate will tell you how many units of the quoted currency you have to pay to buy a unit of the base currency.
BUY GBP/USD as shown above GBP/USD =1.33722 Means that you have to pay $1.33722 for 1 GBP.
When you sell, the FOREX rate will tell you how many units of quote currency you would get when you to sell one unit of the base currency.
SELL GBP/USD as shown above GBP/USD =1.33704 When you sell 1 pound, you will exchange it for $1.33704.
If you believe the base currency will appreciate relative to the counter currency (the exchange rate rises), then you should buy it. Conversely, if you believe that the base currency will depreciate relative to the counter currency (the exchange rate drops), then you should sell it.