When speaking with those who haven’t tried forex day trading system before, even if they are familiar with th eworld of bonds, futures, or even stocks, it always reminds me that sometimes even the most basic foundational elements of this global powerhouse of a market have to be explained . So let’s take a good look at pairings, what they mean, and what the main and cross pairings happen to be .

What exactly is a currency pair ? First we’ll look at the Eur/Usd this has as the base currency the US dollar against the Euro . When I see a price quote of 1.3200 on the Eur/Usd, what does it mean ? The easiest way to remember the answer is this : you take the base currency pair, which is the US dollar in this case , look at the price quote of 1.3200 , then tell yourself , " to buy 1 Euro it will take me 1.3200 US dollars ." The price quote means exactly that . If you check the price quote a couple of months later and it is suddenly 1.4000 this means that against the Euro the US dollar has become weaker because it now takes 1.4000 US Dollars to buy 1 Euro . Conversely , if you find the price quote is 1.2500 down the road, then the US dollar has gained strenght since purchasing one Euro will only take you 1.2400 US dollars .

Forex day trading system can be especially challenging when you see a price quote of say 100.50 on the Usd/Jpy pair for example . Using the above method , simply take the base currency of Jpy and look at the 100.50 price quote and that is how many Jpy it will take to buy 1 US Dollar . Pretty easy huh ? Now you will have no difficulty understanding the price quote on any pair when looking at a quote window or even a chart screen.

Now that price quotes can be read, you may wonder what are the cross pairs and the main pairs? The main pairs are the world’s strongest economies agasint the US dollar . Several of the main pairs include the Gpb/Usd, Usd/Jpy, Eur/Usd, and Usd/Cad . Cross pairs do not involve the US dollar including the Eur/Gbp, Eur/Jpy, and Gbp/Jpy to name several popular options .

Hopefully this brief article will be helpful to you if you find you’re intimidated by the forex day trading system landscape previously. It can take a while to get used to it with the many economies, currency pairs, and different time zones . But once you start to wrap your mind around how all of the pieces fit together it’s really not that bad – and to many, this is a whole lot of fun!

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This entry was posted on Wednesday, September 8th, 2010 at 3:21 pm and is filed under Day Trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.