People who are far from working with the currency exchange do not always understand what a stock quote is and how to read it correctly. To begin with, we are talking about the relative value of two currencies. That is, the cost of a unit of one currency is expressed in a certain number of units of another. After all, it is impossible to estimate the value of the dollar, for example, if you do not compare it with other currencies.
Presentation of the value of currencies on the exchange
Any stock quote looks like a slash transfer of two state currencies. So, to find out how the Russian ruble is currently valued, you need to look at its value against the dollar. Since the dollar is used all over the world for calculations, as a rule, each country keeps records of its relative value to the national currency.
Since we are talking about exchange quotes, where a lot of speculative operations are carried out, exchange participants need constant monitoring of the slightest changes in the exchange rate, so the currency quote of any pair is displayed as a changing online chart, where the slightest fluctuations are clearly visible.
Speculation on currency price changes
Usually, the fourth digit after the decimal point, that is, 1/10 000 of the relative value of the currency, is taken as the unit of change in the stock quote on the chart. Changing the price by only a few points or pips can lead to large losses or, conversely, to significant profits, since trading on the exchange is carried out using leverage: having a small amount of money in your account, the exchange participant can make transactions with large volumes of lots.
The image above shows a graph of the exchange quotations of the ruble against the dollar in the form of a line and in the form of candles, which are used by traders to analyze the situation on the market (left in the corner). At the time of writing, the value of the dollar was 57.9 rubles - this is the amount in rubles given for one American dollar.
Forward and reverse exchange quotes of currencies
The USD / RUB chart refers to inverse quotes against the Russian ruble. Direct quotes are those in which the national currency comes first and is priced in dollars or another currency. In the USD / RUB pair, the US dollar is the base currency (in first place), and the Russian ruble is quoted. In exchange trading, most national currencies are presented in the form of reverse quotes, in which the dollar comes first. Direct are usually used for strong currencies: the British pound and the currencies of the former English colonies (Australia, New Zealand), as well as the euro.
In addition to direct and reverse quotes on the exchange, you can see cross rates. This is the relative value of one currency to another without the participation of the American dollar. Examples of cross rates: EUR / JPY, AUD / NZD, where the euro is trading against the Japanese yen and the Australian dollar is relative to the New Zealand dollar.
What is spread, bid and ask prices?
It doesn’t matter if a person is just going to buy or sell currency for himself or is going to make money on the stock exchange on speculative operations, he will have to face two prices: Ask - the purchase price and Bid - the sale. The first is always a little more than the second. The difference between them is called the spread, and it is it that makes it possible for the exchange to exist, which makes a profit in the form of the spread charged from bidders. That is, the exchange, like a regular exchange office or bank, sells currency to bidders more expensive, but buys cheaper.
In the image above, the red horizontal line represents the Ask price and the black below the Bid. As we see, the difference between them is 3 last decimal places or 3 points. On the left side of the terminal, the image shows the stock quotes of various currency pairs that are available for trading.
Stock quotes
In addition to currencies, the exchange trades with many other assets. According to experienced traders, it is better to use stock trading to make money on speculation. In Russia, trading is currently being held on the Moscow Exchange, which combines the previously separate MICEX (currency exchange) and RTS (commodity).
On the Moscow Exchange website you can find not only stock quotes of various stocks online, but also a lot of information that helps the trader in deciding on speculative positions. In particular, the number of transactions per day for each asset, the trading volume in rubles or lot currency, and much more. On the Moscow Exchange all prices for shares are indicated in rubles. The most popular for traders are shares of Sberbank and Gazprom. The trading volume of the first a day is more than 2.5 billion rubles, which makes the asset volatile and therefore extremely attractive to traders.
Exchange quotes of currencies and stocks can be used both for personal purposes to form a portfolio of assets, and for the purpose of earning on speculative operations on the exchange. It is important to understand and be able to correctly calculate the value of the base currency relative to the quoted currency or vice versa at any time.