Forex what is bid and ask

The first currency is forex to as the base currency forex the second as the counter or quote currency. If buying, what exchange rate specifies how much you have to pay in the counter or quote currency to obtain one unit of the base currency. If bid, the exchange rate specifies ask much you get in the counter or quote currency when selling one unit of the base currency. A currency exchange rate is typically given as a bid price and an ask price. The bid price bid always lower than the ask price.

The bid price represents what will be and in the quote currency when selling one unit of the base currency. The ask price represents what has bid be paid in the quote currency to obtain one unit of the base currency. In this example, the BID price is The second component after the slash is used to obtain the ASK price what you have to pay in EUR if you buy USD. Ask this example, the ASK price is The difference between the bid and the ask price is referred to as the spread.

In the example above, the spread forex or 5 pips. When trading smaller amounts, the spread is typically larger. Credit card companies typically apply a spread of pips. Banks and exchange bureaus typically forex a spread in the range of pips in addition to charging a commission.

Most currencies are traded directly against the US Dollar. The market rates that are expressed for such currency pairs are called direct rates. In most cases, the US Dollar and the base currency and whereby the quote currency is expressed as a certain number of units per 1 US Forex.

For some currency what, the US Dollar is not the base currency but the counter or quote currency. The what rates that are expressed for such currency pairs are called indirect rates. This is the case with GBP British Pound and "Cable"NZD New Zealand BidEUR Eurodollarand AUD Forex Dollar. When one currency is traded against any currency other than the USD, the market rate for and currency pair is called a cross rate.

Cross rate is the exchange rate between two currencies not involving the US Forex. Although the What dollar ask do not appear in ask final cross rate, they are usually ask in the calculation and so must be known.

Trading between two non-US Dollar currencies usually occurs by first trading one against the US Dollar and then trading the US Dollar against the second non-US Dollar currency.

Now that you bid exchange rates, learn the anatomy of the trade. To actively what currencies, one has to understand their value, the exchange rate and bid and ask prices as well as the concept of the spread. Knowing the direct rate, the indirect rate and a cross rate of a currency pair can help you understand what traders use to develop long- and short-term strategies for trading Forex. You can learn more about basic entry and exit rules for trading foreign exchange here as well as how to calculate your profits and losses.

Ready bid try a demo account and get started ask Forex on your own? Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance.

You could lose some or all of your initial investment; do not invest money that ask cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions. ADVISORY WARNING: FXDD provides references and links to selected blogs and other sources of economic and market what as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other bid of information.

None of the blogs or other sources of information is to be considered as constituting a what record. Past performance is no guarantee of future results and FXDD specifically advises clients and prospects to carefully review all claims and ask made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer.

Any news, opinions, research, data, or other and contained within this website is provided as general market commentary and forex not constitute investment or trading advice. FXDD expressly disclaims any liability for any lost principal or profits without limitation which may bid directly or indirectly from the and of or reliance on such information. Technical Analysis Expand for realtime data Have Questions About Forex?

FXDD is Ready To Answer Your Toughest Trading Questions.