Forex traders need to understand trading quotes. It looks daunting, but is intuitive and does need brainstorming. A trading quote represents two currency symbols separated with a slash, like USD/JPY. Every symbol has 3 letters. The first two letters define the country name, and the last letter determines the currency. For example, USD resembles the United States Dollar, and JPY represents the Japanese Yen. Major currencies are listed in this manner with some exceptions. These are called exotic currencies like ARS or the Argentine Peso.
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In the financial trade market, currencies get quoted in pairs. Comparison is a must to express value. For example, in the USD/JPY currency pairs the dollar is the base currency, and the yen is the counter currency or quotes currency or term currency. The value of the dollar is expressed in yen.
Bid & ask price
The quote will show two different prices. Bid or selling price and ask or buying price. In general, when the price is low the traders buy currency pair and sell it when rates rise. You can get choose the Forex API Python package from 1forge.com to get real-time financial market data.
Spreads
The buying price is more than the selling price. The difference between the two is called the spread. It is the commission brokerage platform that earns for implementing the trade. For major currencies, the spreads are tight because of high volume and liquidity. For EUR/USD, the spread is 0.6 pips, which is no surprise as it is a popular traded currency pair.
Direct versus indirect quotes
The quotes get displayed according to home currency or your residential country. For US traders, a direct quote will read EUR/USD or JPY/USD. The US citizen will get one Euro price in a direct quote. Indirect is the opposite of a direct quote. It helps to convert foreign currency shopping into domestic currency.
