Quotes

To deal with quotes, remember the currency exchange. There  we always see the difference between the purchase price of the currency and the price of its sale. This difference amounts to earnings of the bank, which buys and sells the currency. If you trade through a broker in the FOREX market, we can also see the difference, but not so much as in exchange, but much smaller. For example, the  quotation «EUR 1.2700/1.2705» means that the broker is willing to buy euro that we have against the U.S. dollar for 1.2700 and to sell us the Euro for 1.2705, and the  difference between the purchase price and sale price will be 5 points (0,0005).

The first price in the quotation is the price of selling our currency  called the price of Bid, it is lower. The second price is purchase price of buying our currency called the price of Ask, it is higher. As previously indicated, 1 point is the minimum unit of price change. Notation of quotes of foreign currencies with four significant figures after the decimal point is a standard record for all major currency pairs, except the yen. Moreover, for pairs of EUR / USD or GBP / USD price of one item will be equal to one dollar exactly when to make a deal size of 10,000 units of base currency. For the franc (USD / CHF)  the price of one item will be about $ 1, and it will be little change with a change in course.

For the Japanese yen the notation is: USD / JPY 117.10/117.15. As seen, after a point there are only two significant figures. This notation is useful because it allows you to keep "weight" of one item. It will be about $ 1 in the transaction of  10,000 dollars. How to make transactions on such large amounts, without sufficient capital we will discuss in the next lesson.