Forex Options Quotes
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Most forex quotes the price of U.S. dollar have (USD) as the base currency (direct quote). Therefore, it is easy to calculate the cost, as always is 1 U.S. dollar matches any price that the quote is displayed. However, there are exceptions to this rule. There are four currency pairs involving the U.S. dollar, but where the U.S. dollar is the base currency, but the quote (indirect quotation).
The Australian dollar (AUD) British Pound sterling (GBP), the dollar Euro (EUR), and the New Zealand dollar (NZD) are the 4 currency pairs, where the U.S. dollar not the base currency, but currency trading.
For example, a price quote on the GBP / USD 1.8800 means that one British pound equals to U.S. $ 1.8800. Similarly, if the price of the GBP / USD currency pair increases mean that the pound sterling (GBP) has appreciated against the dollar U.S. or that the U.S. dollar has weakened against the Pound Sterling (GBP).
Conversely, if the price of the GBP / USD currency pair falls, mean The pound sterling (GBP) has weakened against the U.S. dollar or that the U.S. dollar has strengthened against the British pound (GBP).
Finally, There are 3 types of dates. First, a direct quote when the U.S. dollar (USD) is reflected as the base currency. Secondly, an indirect quote, where the U.S. dollar (USD) is reflected as a trading currency in place of a base currency (as example above). Third as a quotation from the Cross, where the U.S. dollar (USD) is not cited in the currency pair, for example, GBP / EUR.
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Article Source: ArticlesBase.com - Forex Options Trading - How to Read Forex Price Quotes (part 3 of 3)
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