Manual step by step to read a pair.

Manual step by step to read a pair.

In this article we him will explain to those interested parties in investing in Forex the way as a pair is read. This step is important because it is a basic tool to understand and to operate in the world of the investments that are done in the platform and on having operated in general on the foreign exchange market Forex.

We hope that it should be useful to the reader and should guide it appropriately to give the first steps towards turning into a Forex investor.

The way of reading a pair of currencies:

To read a pair of currencies in Forex it is necessary to show the way in like this one it appears before us. The pairs will always appear in such forms like JPY/EUR 1.230, EUR/USD 1.033, USD/GBP 2.001, etc.

The first thing that it is necessary to understand is that in all the operations that are done on having invested in Forex the user buys a currency and sells other one in a simultaneous way, shaping this way the pair of currencies.

Whenever there appears before us a pair, like USD/GBP 0.700, it means that a unit of the first currency that appears in the pair (in this case it is the Dollar: USD) is equivalent to the value that appears to the right of the second currency (that is the pound sterling of Great Britain). In this case, an American dollar (USD) buys in Pounds sterling of Great Britain (GBP) 0.700 units, this means USD/GBP 0.700.

We can repeat the example with another pair. Let's say that there appears before us the pair EUR/USD 1.200. In this pair the first currency is the EURO of the countries of the European Union, the second currency is the American Dollar and the value that appears to the right. This pair would be read this way: With an Euro I can buy 1.200 American Dollars, or, what is the same, 1.200 American dollars are equivalent to 1 Euro.

The technical terms to designate the places that occupy the coins and the values when a pair of currencies is offered us on having invested in Forex, they are: To the first currency that appears there will be called he a basic currency, to the second currency that appears in the indication there will be called he a currency counting, to the value that appears in finally in the pair, there will be called he an exchange rate. Let's put an example. Let's say that we have the pair EUR/JPY 1.030, in this case there will be called he a basic currency to the counting Euro, currency to the Japanese Yen and there will be called he an exchange rate to the fact of that an Euro one is equivalent to 1.030 yenes Japanese.

ASK and BID.

These two terms it is fundamental to know them to be able to invest in Forex. We are going to explain them first and later we will illustrate with examples.

These terms are used to designate which are the prices of offer and of demand that imply trading a currency.

There is called he Ask at the cost of demand of a currency, this means that the market is ready to sell at a certain price the currency in question.

He is called the previous one Bid to the opposite effect of, bid is the offer price of a currency, which one is the price to which the market is ready to buy a certain currency on having invested in Forex.

Now let's put an example to illustrate:

Let's say that we take for the example an indication like that: JPY/USD 1.220/25 where there says Sell Yen 20 and Buy Yen 25.

In this case the price of demand of the Yen is 20 (1.220, since only two decimal last ones appear) and the offer price of the Yen is 25 (1.225 in fact, so only appear two decimal last ones).

In this case it means that the price of Ask of the Japanese Yen is 1.220 American dollars and the Bid is of the Japanese Yen to invest it is 1.225 American dollars.

We hope that these instructions they should be useful so that they could invest in Forex without doubts or counterfeet. We wish them success in his investments.

---