Forex, also known as foreign exchange, is the largest decentralized financial market in the world where currencies are bought and sold. It is a global marketplace where the value of currencies fluctuates constantly. In order to understand the forex market, it is important to know what the numbers on the side of forex mean.
Forex quotes consist of two prices: the bid price and the ask price. The bid price is the price at which a trader can sell a currency pair, while the ask price is the price at which a trader can buy a currency pair. These prices are usually quoted to four decimal places, with the last digit representing a fraction of a pip. A pip is the smallest unit of price movement in forex trading.
The first number on the side of forex represents the bid price, while the second number represents the ask price. For example, if the quote for the EUR/USD currency pair is 1.1300/1.1303, the bid price is 1.1300 and the ask price is 1.1303. The difference between the bid and ask price is called the spread.
The spread is an important factor to consider when trading forex as it represents the cost of trading. Traders need to pay the spread each time they enter a trade, which reduces their profits. In general, the tighter the spread, the better it is for traders.
The third and fourth numbers on the side of forex represent the fractional pips. These numbers are used to provide a more precise quote for currency pairs. For example, if the EUR/USD currency pair is quoted at 1.13005/1.13008, the fractional pip represents a price movement of 0.1 pip.
In addition to the bid and ask price, the side of forex also displays the high and low prices for the day. The high price is the highest price at which the currency pair traded during the day, while the low price is the lowest price at which the currency pair traded during the day. These prices are important for traders to determine the trend of the currency pair and to identify potential trading opportunities.
The side of forex also displays the time of the last trade. This information is important for traders to know when the last trade was executed and to determine the liquidity of the market. A highly liquid market has a high volume of trades, which means that traders can enter and exit trades quickly without affecting the price of the currency pair.
In conclusion, the numbers on the side of forex represent the bid and ask price, the spread, the high and low prices for the day, the fractional pips, and the time of the last trade. Understanding these numbers is essential for traders to make informed trading decisions and to maximize their profits in the forex market. It is important to note that forex trading involves a high level of risk and traders should only invest what they can afford to lose.
