The need to learn how to read quotes arises for anyone who wants to become a player on the stock exchange. The prices of currencies, commodities and securities are constantly changing, this is the meaning of speculative earnings. So, the announcement of these prices at the current moment is called a quote.
Instructions
Step 1
To find out the rate of the corresponding exchange object, look at the quotes. If you are interested in securities, then such quotes are two-sided and one-sided. This is due to the desire of a dealer who is either open to buy and sell, or wants to make only one type of sell / buy operation.
Step 2
In a one-way quotation, the purchase / sale price and the number of securities (stocks, bonds) are indicated, for example: price = 2, 43, quantity = 20,000. In the case of two-sided, you will see two prices and two quantities, and the purchase price is always lower than the ask price: buy_price = 3.45, qty1 = 35000, sell_price = 3.54, qty2 = 33000.
Step 3
You can calculate the volume of a two-way quote, which is calculated simultaneously for one and the other operation: Volume_buy = 3.45 * 35000 = 120750; Volume_Sell = 3.54 * 33000 = 116820.
Step 4
Keep in mind that the terms “buying” and “selling” refer to the actions of the dealer who wishes to complete the transaction. Your actions will be exactly the opposite: you buy at the selling price and sell at the purchase price.
Step 5
Perhaps you saw something familiar in this information. And rightly so: this principle is well known to those who have ever changed or bought currency at an exchange office. The same exchange office, roughly speaking, can be called a currency exchange.
Step 6
Quotes on foreign exchange markets are only bilateral, since the price of a currency itself is not interesting to a trader. The essence of his work is precisely to make money on the difference in selling / buying rates and to do it at the right moment.
Step 7
Currency quotes are subdivided into forward, reverse and cross rates, although their records are the same, for example, USD / EUR, GBP / USD, etc. The direct one characterizes the foreign currency rate, and the reverse one - the national one. To read such quotes, it is necessary to determine which currency in the pair is base and which is quoted.
Step 8
A base currency is a currency that is expressed in the number of units quoted. With a direct quote, it comes first in the record: USD / JPY = 150, 00 means that 1 US dollar contains 150 Japanese yen. In case of a reverse quote, they swap places - EUR / USD = 1, 4000.
Step 9
Cross rates are formed through the ratio of both currencies to a certain third, which is not included in the recording, although it affects the price. Most often, the US dollar is used as this unspoken value. So, let the EUR / USD rate = 1, 4000, and USD / JPY = 150, 00, then EUR / JPY = EUR / USD * USD / JPY = 1, 4000 * 150, 00 = 210, 00.
Step 10
The need to introduce such a variety of quotes was introduced for readability. If, for example, you write down JPY / USD, then it turns out that this pair is approximately 0, 0066 (6), and USD / EUR = 0, 714. Therefore, it is customary to write down the first currency, the value of which is higher than the second.
Step 11
Now about what kind of suspicious extra zeros are written after the comma. Mathematically, they are insignificant, but in stock terminology they are important. The number of these characters shows the number of points corresponding to the base currency. One pip is the minimum price change. Those. if the price of EUR / USD was 1, 4000, and then became 1, 4001, then they say that it increased by 1 point. Accordingly, for the USD / JPY pair it will not be 0, 0001, but 0, 01, which follows from the record. The same goes for securities.
