Saturday, April 08, 2006

First steps...

An excellent resource for any newbie like me is baby pips. This site assumes you have no prior knowledge and is very helpful indeed. I have installed MeataQuotes 4 and signed up for the interbankFX data feed this is the first image you will see when you open the program:

To the left of the window we can see the market watch window. This is enlarged and shown below.

We can see that for each currency pair there is a Bid and Ask price. The Bid price is the price that the broker or dealer is willing to pay you for the currency and ask price is the price in which the dealer or broker is willing to sell the currency for. Notice there is a difference between the bid and ask prices, this is know as the spread. The spread is what the dealer broker makes. Based on the above table we can see that different currencies attract varying spreads:

GBP/USD 4 pips
EUR/USD 5 pips
USD/JPY 3 pips
AUD/USD 5 pips
USD/CAD 5 pips
EUR/GBP 4 pips
EUR/CHF 4 pips
EUR/JPY 4 pips
GBP/JPY 9 pips
GBP/CHF 7 pips
EUR/AUD 8 pips

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