The article below is from a series of investment articles and videos on making money with forex trading strategies …
The first time that many investment trading beginners pull up forex quotes and try to interpret them can be confusing for those who are only familiar with common stock exchange quotes. The only actual similarity between common stock quotes and forex quotes is the nature of the information that they provide. While a forex quote does, ultimately, tell you the price, it is not as cut and dry as it would be with common stock and requires a little interpreting.
The first part of the quote lets the forex trader know which currency is involved. The country listed first is referred to as the base currency. This means the trader currently holds that currency and he is using it to buy the quote currency, sometimes called the trade currency. For example, a quote that reads USD/JPY means that the forex trader currently holds United States Dollars and wants to trade them for Japanese Yen. Forex quotes always start this way, with the two currencies involved forming what’s called the cross.
The second part of forex quotes that you need to look at is the pricing segment of the quote. To continue the example from above, if the quote read USD/JPY=117.57, then the trader knows that for every 1 US dollar he or she trades, he will receive 117.57 Japanese Yen in return. While this may seem really uncomplicated, there are a few more details about these quotes that a forex trader needs to take into account before proceeding with the foreign exchange trade.
Following the initial line of the quote, which contains the two currencies that form the cross and the exchange rate, is another line of information. This is probably more familiar to common stock traders. Bid prices and ask prices, which make up an integral part of forex quotes, function in trading forex much the same way. The bid price is the price at which you can sell the currency. In other words, that is the price that people are willing to buy it. The buy price is what you will have to pay if you want to purchase the currency. There is usually a difference between these two numbers, but it is seldom substantial.
While it is possible to trade forex in any number of currencies, the largest numbers of forex quotes that are traded every day involve what are known as the majors. The US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar make up more than 85% of all forex trades. These currencies make up the most stable markets in the world and carry the most volume. These facts make them the least risky foreign exchange currencies to trade. It is not likely that you will end up holding huge amounts of worthless money if you trade in the majors.
For more information on 4x trading, visit: Forex Trading Systems