How to Read a Forex Quote

Beginner Questions
1

Hi all, I am currently educating myself on this site and have become stuck at this point: School of Pipsology > Preschool > How to make money trading forex

I fully understand the second part of the statement below but cannot get my head around the first part:

For example, the USD/CHF exchange rate indicates how many U.S. dollars can purchase one Swiss franc, or how many Swiss francs you need to buy one U.S. dollar.

I understand that if USD/CHF = 0.95 then $1 is worth 0.95 CHF / I pay 0.95 CHF to buy $1 / selling 0.95 will get me $1 but how does USD/CHF indicate “how many U.S. dollars can purchase one Swiss franc?”

The answer is probably staring me in the face but its annoying me that I can’'t grasp this, can someone please explain this for me?

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2

Cheers! You’re in the right place to ask anything here. I just finished PreSchool few days back. But looking at your question, I can say that you might be weak in maths right?

Say USD/CHF = 0.95
This represents 1 USD = 0.95 CHF.

Now you’re asking the opposite, how much dollar in one CHF, so

1 CHF = 1/0.95 USD = 1.0526 USD

To purchase 1 CHF, you need to sell 1.0526 USD.

In trading practice, when you want to purchase or buy Swiss Franc CHF, it basically means you want to sell (or short) USD/CHF.

In general, if you want to calculate the opposite in the given pair, just solve 1 divide by exchange rate.

Easy? Hope you’re having good journey in Pipsology.

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3

Yes Arobun, it’s easy the way you explained it. It makes sense to me now, thanks.

While I may have been over thinking it, you are correct in suggesting that maths is not my strong point.

As well as trying to learn how to trade forex I’m also having to develop my maths skills from the ground up.

4

Great. Forex is a whole lot about numbers, need quick decision, so I think maths is the basic foundation to enter Forex. You don’t need to go to whole parts of maths, instead be strong in understanding these three parts, “Simplicity”, “Percentage”, “Profit & Loss”. I think these three are very important enough for trading.

Also practice some shortcuts of approximation in multiplication and division.

I hope you have enough time to grasp these parts. :slight_smile:

Please notice the correction in my first message:

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