How to read stock quotes of currencies and stocks correctly

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:44

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 the two currencies. That is, the value 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.

Representing the value of currencies on the stock exchange

Any stock quote looks like a listing of two state currencies through a slash. So, to find out how the Russian ruble is now valued, you need to look at its value against the dollar. Since the dollar is used throughout the world for settlements, as a rule, each country keeps a record of its relative value to the national currency.

Since we are talking about stock quotes, where there are many speculative transactions, exchange participants need to constantly monitor the slightest changes in the rate, thereforethe currency quote of any pair is displayed in the form of a changing online chart, where the most insignificant 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. A price change of just 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 his account, an exchange participant can make transactions with large volumes of lots.

The image above shows a chart of exchange quotes 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 (on the left in the corner). At the time of this writing, the value of the dollar was 57.9 rubles - this is exactly the amount in rubles given for one US dollar.

Direct and reverse exchange quotes of currencies

USD/RUB chart refers to reverse quotes against the Russian ruble. Direct quotes are those in which the national currency comes first and is valued in dollars or another currency. In the USD/RUB pair, the US dollar is the base currency (it comes first), and the Russian ruble is the quote currency. In exchange trading, most national currencies are presented in the form of reverse quotations, in which the dollar is in the first place. Direct lines 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, you can see cross-rates on the stock exchange. This is the relative value of one currency in another without the participation of the US dollar. Examples of cross rates: EUR/JPY, AUD/NZD, where the euro is traded against the Japanese yen and the Australian dollar is traded against the New Zealand dollar.

What is the 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 exchange on speculative operations, he will have to face two prices: Ask - the purchase price and Bid - the sale. The first is always slightly larger than the second. The difference between them is called the spread, and it is this that makes it possible for the exchange to exist, which makes a profit in the form of a spread charged from bidders. That is, the exchange, like a regular exchange office or a bank, sells currency to bidders at a higher price, and buys it cheaper.

In the image above, the red horizontal line represents the Ask price and the black one below the Bid price. As we can see, the difference between them is 3 last decimal places or 3 points. On the left side of the terminal in the image are stock quotes of various currency pairs that are available for trading.

Stock quotes

In addition to currencies, many other assets are traded on the stock exchange. According to experienced traders, it is better to use stock trading to make money on speculation. In Russia at the momenttrading is carried out on the Moscow Exchange, which combines the previously existing separately MICEX (currency exchange) and RTS (commodity exchange).

On the website of the Moscow Exchange, you can find not only stock quotes of various stocks online, but also a lot of information that helps a trader in making decisions on speculative positions. In particular, the number of transactions per day for each asset, the volume of trades in rubles or in the currency of the lot, 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 day is more than 2.5 billion rubles, which makes the asset volatile and therefore extremely attractive for 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 making money on speculative transactions on the stock exchange. It is important to understand and be able to correctly calculate the value of the base currency relative to the quoted one or vice versa at any time.