Quote in layman’s terms and its types - GERCHIK & CO

Quote: here’s what traders need to know

25-03-2020

Quote is the price of the goods formed in the course of trading. The traders announce the price at which they are willing to make an offer and make a deal. Typically, a quote means a dynamic price (exchange price).

Соntents:

1. Why does a trader need a quote
2. Exchange Quote
3. Forex Quote
4. Stock Exchange Quote
5. Exchange Quotation Commission

Why does a trader need a quote

Do you wish to trade boldly, buy profitably and make solid money? Learn to track down and analyze quotes.

Quote explained in layman’s terms

The quotes have three unique features the traders should be aware of:

1. Quote is a dynamic indicator that fluctuates depending on a variety of factors. These are primarily macroeconomic indicators of the country, the currencies of which are included in a currency pair (if we are talking about the foreign exchange market).

2. A reliable trading platform (in terms of the foreign exchange market, it is a broker) means accurate data on currency quotes. Inaccurate data is a recipe for loss of profit. In other words, it is better to trade currency assets where quotes are supplied by liquidity providers, and are not just fabricated.

3. The quotes may move in one direction for a long time, and then suddenly change their movement direction completely. The trader’s ability to quickly react to these dramatic price movements is the key to profitable trading.

The quote is not just a ratio of figures. Aside from knowing theoretical approaches to quote analysis, the trader should be able to use them effectively in a real-case scenario. Being able to “feel” the market, knowing the quote dynamics and having the ability to use them the right way are essential for successful trading. Now, if you couple it with analytical tools and solutions offered by the broker, your chances of succeeding improve significantly.


Exchange Quote

Exchange quote is the price of one currency unit expressed in terms of another currency unit (the national currency of another country). An integral quote includes a selling rate which is typically higher and a buying rate which is lower.

Exchange quotes can be split into:

  • Official quotes determined depending on the specifics of the country's exchange rate arrangement and the unique features of the currency system;
  • Interbank quotes determined by the market makers through analysis and comparison of the existing needs for each currency in the global market;
  • Stock exchange quotes formed by sequential analysis and comparison of demand for purchase and sale of the currency.

Forex Quote

Forex quote is the ratio of one currency against another. The basic law of the currency market is as follows: one currency will always be purchased using the currency of another country. The exchange quote is often expressed using a slash e.g. EUR/USD.

Currency quotes are formed by:

  • Base currency which is purchased (the first in the pair).
  • Quoted currency that is used to purchase the base currency (the second in the pair).

As far as the aforementioned example goes, dollars are paid to purchase euros. If we take the 1.0807 quote, it means you will need to pay 1.0807 dollars for one euro.

Forex quotes are formed by market makers, while other players’ orders are being shaped depending on the buying rate established by market makers. A number of factors such as the world’s political and economic situation, natural and other disasters and even environmental issues affect the Forex quotes.


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Stock Exchange Quote

A stock exchange quote is the price of stocks, bonds, options, and commodities. The special thing about it is that it’s essentially the real price of contracts for the sale of commodities concluded in real time. This quote is determined here and now. Aside from tracking it down and analyzing, you also have to calculate and predict it.

Types of stock exchange quotes are:

  • Bid lirice.
  • Ask lirice.
  • lire-contractual lirice i.e. lirice established lirior to the deal.
  • Last lirice i.e. the final lirice of the deal.

Exchange Quotation Commission

The task of the Quotation Commission is to monitor and execute control over the deals made by stock market players. It also identifies real quotes and publishes them.

Data on the quote position on the stock exchange are shown on the quote sheet that all traders have access to. That said, the traders can create their own sheet using the securities and commodities they are interested in.

Quotes and all you should know about it

The following information is shown on this sheet:

  • Current lirice (and its fluctuations).
  • Volumes of trades made.
  • Date and time of the quote.
  • Data on the issuer (i.e. the authority that controls the securities).
  • Initial and final lirice of the market value.
  • Minimum and maximum value of the lirice throughout the trading day.

On top of that, the Quotation Commission regularly publishes an exchange newsletter which is essentially a publicly available report on exchange data.

Keep in mind that the quote won’t help you make money unless it demonstrates accurate market figures. That is why, it makes sense to use trusted trading platforms.



What to know:


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