Currency Trading Quotes

Currencies are typically denominated in pairs. With the currency you are buying at the top and the currency you are selling on the bottom. For example EUR/USD means that you are buying the Euro and selling the US Dollar. So if you feel like the Euro is going to go up relative to the USD you can buy that pair. And if you feel like the USD is going to go up relative to the Euro you can sell the pair.Currency pairs are quoted based on how much of the currency you are selling is required to buy 1 unit of the currency you are buying. Let's use the EUR/USD example again. If it takes exactly 1.5 US Dollars to purchase 1 Euro, than the quote will show up as 1.5000. Typically the currency pair rate will go to 4 decimal points. The fourth digit after the decimal point is known as a pip which is 1 unit of movement for a currency pair. Because the Japanese Yen has such a low value, pairs with the Yen on the bottom are quoted to the second decimal point.