Forex Trading Beginners Guide: The Golden Investment Strategies for Passive Income and Lifetime Wealth Building Used for Swing Trading, Momentum Trading, Options & Stock Market! by Walsh Oliver

Author:Walsh, Oliver [Walsh, Oliver]
Language: eng
Format: epub
Published: 2019-10-27T16:00:00+00:00

Currency Quotes

Now we come to the whole business of how currency pairs are quoted in the market and what this all means.

Let’s start with a simple example from the MT4 trading platform which will make it much easier to explain.

Fig 3.10 - Quotation window on MT4 for EUR/USD

In this example we are looking at a quote for the EUR/USD which I have circled at the top of the image. In Fig 3.10 you can see that we have two numbers quoted here, 1.30110/1.30136 - what do these numbers mean? Let me explain.

Until recently currency pairs were quoted to four decimal places, in other words, 1.3000 or 0.5690, where the last digit was the most significant for us as forex traders (and I’ll explain why in a moment). However, in the last year, the quoting conventions have changed, and currencies are now quoted to five decimal places, as we can see here. We have one number which is 1.3011(0) and the second which is 1.3013(6), and I have added the fifth decimal place in brackets.

Whilst most of the major currency pairs follow this new convention, there is one that is only quoted to three decimal places, and that’s currency pairs with the Japanese Yen, where the second decimal place is the most significant.

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