Let us learn of how to understand quotations of currencies (for example, on the basis of dollar):
The quotation is a name of the price in the currency market on which exchange is made. The trader can buy or sell this or that currency under the price – the quotation. As a rule, in the quotation it is recreated two prices, such, as the purchase quotation (when the seller is ready to sell currency) and the sale quotation (the seller is ready to buy currency).
The current price of the market occurs from a last quotation of the price of sale or purchase, and then subsequently is exposed by banks and this means by market makers for clients.
In the market two foreign currencies participate in the transaction that is fixed currency and contra currency.
The first is base currency of which the certain quantity is usually bought, the second is quotation currency and it all time varies and depends on course modification. At increase in a parity of currency to the quotation currency, base currency becomes more expensive and at its reduction it accordingly becomes more cheaply and it defines change of a position of currencies.
When the quotation of the first currency is disclosed, means that it is base. For example, if the quotation sounds, as «dollar – euro» the dollar is base currency, and the quotation «franc – dollar» means that here the base currency is franc.
There are international standards of codes of currencies and for their representation use their steams. So the quotation «dollar – euro» will be designated as USDEUR and the quotation «franc – dollar» as CHFUSD.
The quantity of units of national currency which is necessary for acquisition of unit of a foreign currency is called as the rate of exchange. To an establishment of the rate of exchange it is applied return or direct quotations. The return quotation is a definition when cost of unit of national currency is expressed in terms of foreign. In the direct quotation cost of unit of a foreign currency is defined in national currency.
When it is necessary to represent the direct quotation being in the United States of America, the term «the American conditions» is used. It means that the quotation formulation occurs in the American dollars for foreign currency unit; identically it uses with the term «the European conditions» when the direct quotation is expressed in euro for foreign currency unit.
Due to the currency market globalization, the dollar quotation was modified from the American conditions on the European. It means that the US dollar constantly is base currency. In the market invariably there are currencies, such, as euro and pound sterling concerning which the dollar is the currency quotation.
For the realistic tips about forex trading – please visit this site.