The Forex Figures

Today we are going to talk about the basic things you need to know before you start hitting your platform to trade.

They're the BIG FIGURE, SPREAD, HIGH, LOW and the DEALING RATES. 

Below figure shows it all:

Currency Pair: NZDUSD or simply read as New Zealand Dollar vs US Dollar. The rate 0.69993 means it takes .69993 New Zealand Dollar to have 1 USD. Or .700018 means .700018 New Zealand Dollar to have 1USD.

Big Figure, Spread and Dealing Rates

So what's the big figure of the NZDUSD? The big figure is the stem of the dealing rates. The figure above shows two rates the .69993 and .70018 where the stems of each rate are .69 and .70

Why is there a gap in the given rates? Just like your favorite coffee the price in a supermarket (buying) is not the same as the price in the Sari-Sari Store (selling). Meaning if you buy something it is but natural to sell it higher to make money. Now, this gap is what we call spread. In our figure spread should be computed as:

Hence, below should be read as: 

Buying: 0.70018

Selling: 0.69993

Or in short it can be read as 99-01(font is intentionally meant to be bigger than the stems); the two rates given is now the dealing rates.

High and Low

High means the highest price NZDUSD reached in a given market trading day; while Low is the lowest price the currency reached in a given market trading day.

Always remember, the variance between your high and low matters a lot in any given day. On an average a certain currency, no matter how volatile can only move as much as 100-150 pips. If it hits the average daily pip variance it will either congest or retrace.

Learn more about congestions and retracements on our next sessions. Thank you for reading. If you want instant update to our new posts, please subscribe to this blog. ➡️➡️➡️

Why do CURRENCY values change?

So why do currency values change?

There are three apparent reasons for this.

1. Currencies react to political and economic news. The #Brexit issue is the most recent political mania. Such issue is affecting the currencies specifically pound. In my recent blogpost I showed the immediate effect of votation. Please scroll down to the previous posts to check it.

2. Speculators drive the market such as the technical analysts who takes advantage of either bearish or bullish market.

3. Of course there's the international business flows. The law of supply and demand affects the currency fluctuation. For instance, oil drives the market fluctuation. 

What is a FOREX Spread?

A SPREAD in Forex Trading is the difference between the bid and the ask price. Otherwise knows as the variance between the buying and selling prices. Normally, the proceeds go to the broker/specialist that handles the transaction.

So what is a bid and ask price?

Selling price is the BID price and buying price is the ASK price.

Let's look at below image:

We have here an example of AUDUSD, below the currency name you will see that the spread is 16. Such is the difference between 0.74017, the selling price and 0.74033, the buying price.

Note that the closer the spread to zero means the better it will be to trade because reaching break-even point is not going to be very difficult to achieve.

Find out more on how to understand FOREX market, visit us at www.forexcebu.com

#Brexit Mania!

Today, hot as pancake, in the news UK speak up! UK voted to leave European Union in landmark referendum.

The news is followed by UK Prime Minister David Cameron to step down his post.

So what's the effect of this scenario to the big 5 currencies? Let's take a look one by one.

USDCHF 

Hi: 0.9800

Lo: 0.9531

Variance: 269 pips

AUDUSD

Hi: 0.7644

Lo: 0.7300

Variance: 344 pips

USDJPY 

Hi: 106.79

Lo: 98.92

Variance: 787 pips

EURUSD 

Hi: 1.1425

Lo: 1.0909

Variance: 516 pips

GBPUSD 

Hi: 1.5015

Lo: 1.3223

Variance: 1,792 pips

Today we had extreme movements of the market. Since 1985, UK touched an ultime low. It seems to be finding a good bouncing point towards a potential ultime high. My bet is next year the soonest.

Happy trading everyone!