Forex price are quoted in pips. Pip represents "percentage in point", and this is the 4th decimal place, that is 1/100th of one percent. In EUR/USD, a 3 pip spread is usually quoted as 1.2400/1.2403. If you are familiar with the quote prices of many currencies, you will discover that only the Japanese Yen is quoted in 2 decimal places. All other currencies are quoted in 4 decimal places.

For instance, the USD/JPY 4 pip spread is quoted as 113.00/113.04. This is like 1/100th of the Yen, compared to the 1/1000th ot most other currencies.

1. Base currency
When a base currency is the US Dollars, and the currency pair goes up, then it means that the US dollars has appreciated against the quoted currency.

Example, in the USD/JPY pair, if the first is 118.30, and after a while the price becomes 119.00, then it is said that the dollar have appreciated against the Japanese yen. It can also mean that the dollar is now strong enough to purchase more Japanese yen.

But there are certain exceptions to the general rule, such as the British Pound (GBP), Euro (EUR), and the Australian dollar (AUD). Example, when you see the GBP/USD quote price as 1.9000, this means that 1 British pound can buy 1.9000 US dollars. This also applies to the EUR/USD pair, and some others.

In this type of currency pair where the US Dollar is not the base currency, when there is a rise in the price of the quote, it means the dollar is getting weaker. This is because you need more money to be able to buy the base currency, such as the Euro, Pound, and Australian dollar.

And consequently, when the rise is also going down, it means the dollar is take a rise in value. And you need less US dollars to buy the base currency.


2. Cross currency
Such currencies pair that doesn't have the US dollar are usually referred to cross currencies, but the general rule are the same. Example, in the EUR/JPY of quote price of 125.90 means that the you need 125.90 Japanese yen to purchase 1 Euro. The basic rule is the same. If you get into the Forex trading, you will see that there is always a "bid" and "ask" price.

The bid quote is the price where you can go short the base currency in a particular trade, and the ask price is the price where you can go long on the base currency on a trade.

All these will get familiar to you when you stay on Forex for a while.

Quoting currencies is one important part of forex trading you must understand so well enough. The currencies you trade must be well stated, and their relationship with each other, and also their worth to each other should be known.

At the beginning of your forex trading experience, it may seem complex and confusing. This confusion comes about because currencies are quoted in various ways, different from the way equities are quoted.

So understanding the quoting of currencies will become very easy for you if you understand that the base currency is the first currency that is quoted. Again you must know that value of the base currency is 1.

Let's give an example so that you can understand how it works.

If you see a USD/CAD quote of about 1.5000, this simply means that 1 USD is equal to 1.5000 Canadian dollars. Or it means that you can buy one USD with 1.5000 Canadian dollars.

Similarly, if you see the USD/JPY currency pair, first you know that the US dollar is the bse currency, and the value is 1. So for a quote of USD/JPY of 118.00, this simply means that you can buy 1 USD with only 118.00 Japanese Yen, or 1 USD is equal to 118.00 Japanese Yen.


As soon as the US dollars is the base currency, this principle works very fine. But there are some exceptions to this principle, and this is seen in the case of these 3 currencies; the British pound (GBP), the European currency unit (EUR), and the Australian dollar (AUS). So if you see a case where the British pound is the base currency, then it means the value of the GBP is 1. So in a case of the GBP/USD quote of 2.0000, this simply means that 1 British pounds is equal to 2.0000 US dollars, or 1 GBP can buy 2 USD.

Also, the rise of the base currency means that the value of that currency has appreciated against the other one. If US dollars is the base currency against the Yen, and the price goes up, it means that the US dollars is appreciating against the Yen, or you will need more Yen to buy the US dollars.

For example, if the USD/JPY quote is 118.00, and it rises to 119.00, that means the dollars have appreciated. It also means the same thing if the prices fall, that the US dollars have depreciated against the Yen.

But in the case where the base currency is not the US dollars, a rising price simply means that the US dollars is depreciating.

Of course, the different currencies have their different unique qualities. As a fundamentalist, or generally a forex trader must find out these qualities and their relationships when quoted with other currencies.

This is an important thing to do in order to understand the factor that push the prices of these currencies. If you have ben trading for some time as an advanced forex trader, you will certainly know that the dollar/yen doesn't trade the same way as the dollar/swiss. There pattern of trades totally differs and so it is with all other currency pairs. In this article, you will be seeing the variations and the explanations for such variations among currency pairs.


1. The biggie
The Euro dollar is called the biggie. This currency pair is the most traded pair in the history of forex, and it has many exciting characteristics.

The EUR/USD should always be seen compared to other currency pair. For example, when there is a emerging trend in the USD/CHF, or GBP/USD, you will probably be looking out for the emergence of the break out also.

Not all indicators are also suitable for the EUR/USD pair, suggestions are that the momemtum indicator has a better change of analysis, although, this also depends on the trader.


2. The USD/JPY
The USD/JPY has also been recognized as a leading pair in forex. It records around 17 percent of total trades daily. They have the tendency to flunctuate in price in a more zig-zag fashion. But, traders are advices to study these pattern after analysing your indicators to suit your need, then opening a position to this pair may bring in some profit.


3. The USD/CHF
This pair has a very low liquidity, and thus tends to be less traded by advanced fores traders. Do not just pick a pair because prices are moving up and down, make sure you knw the relation before commiting a position.

4. THe GBP/USD
This currency pair is known as the cable. It also doesn't have a good liquidity, and it is as a result of its higher pip value.

Do not apply the same trading methods to all currencies because the differ in characteristics.