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UNDERSTANDING OF FOREX PRICE

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UNDERSTANDING  OF  FOREX   PRICE  ??

 2 different prices quoted in the Forex Market
Bid – price you sell  at
Trader will always sell at lower price(bid)
Ask - price you buy at
Trader will always buy at higher price(ask)
The difference between bid and ask prices is called (pip spread) this is your cost of business and broker’s money because there is often no commission in FX.
A pip is the fourth or fifth decimal place.

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Currency exchange rates often change in very small increments
Currencies are designated by 3 letter standard code
EUR/USD
GBP/USD
AUD/CAD
AUD/USD

 The value of the first currency is always 1, and the price being quoted is for the second currency pair listed.

Take a quote on the EUR/USD for example.

A price quote of 1.2848 means 1.00 EUR can be purchased for $1.28 USD



If an investor buy a mini contract at above price(a mini contract is commonly know as a 10,000 currency contract

The investor would purchase 10,000 EUR in exchange for $12848 USD.

If the price appreciated to 1.2858, the same 10,000 EUR owned by the investor is now worth more US Dollars $12858 USD. $12858 -  $12848 = $10 Profit to due price increase
Otherwise Loss due to price decrease!!!!!


 What  Influences price ????

International Trade
 Investment Flow
 Equity and bond markets
 Economic and political conditions,


Interest rates, inflation, political stability sometime instability that causes daily price volatility 


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