To those who are totally new to the Forex Market, they need to know all about the various technical terms that are widely used in the same. The most basic terms like the platforms, the quotations and other things need to be known to the traders because they are inevitably used in the market. Here the significance of the currency quotes is given. This will also be emphasized upon by the Forex Broker.

When trading, the currency rates are inevitably referred to. The trading always goes on in pairs and it becomes essential to convert currencies and to measure them in terms of the other currency. There are basically two types of currencies that are dealt with in the Forex Market. The first currency is that which is used by the person in the country of residence. That currency or the currency for which the other currency is bought is called the Base Currency. An American in the USA will have the base currency as the USD while a British trader in the UK will have the base currency as the GBP.

The other currency which is traded for the Base Currency is called the Quote Currency. If the trader has chosen his currency pair to be USD/GBP, then the Base Currency is the USD and the Quote Currency is the GBP. Supposing the value of GBP traded for 1 USD is 0.6236, then the typical quotation is given as USD/GBP = 0.6236. This means that if 1 USD is traded for an equivalent amount of GBP, then the trader will receive 0.6236 Pounds in return.

The shown figure is normally given with some common difference between the two quoted prices and the actual market price. This common difference is nothing but the Spread that the Forex Broker charges the trader. Suppose the same example as above, then the apparent figure before the quotation will be 0.6230/42 supposing that the spread is worth 6 pips. The pip is the basic unit when measuring the currency conversion rate. It is also the basic unit of measurement when taking into consideration the profit and loss margin. The pip is usually measured as the last decimal in the conversion rate. In this case, the pip will be 0.0001 unit of the currency.

The two numbers mean that if one had to buy the GBP for the USD, then he would have to buy them at 0.6242 and then sell them at 0.6230. If the trader had 100 USD, then he will get 62.30 GBP in return for them. If he had to sell the same USD for GBP, then he would get 62.42 Pounds for 100 USD. A trader with the GBP as the base currency will receive 62.30 pounds for them in return if he had to sell off the foreign currency, in this case the USD.