When a currency is quoted in the foreign exchange market, it is usually quoted in terms of another currency.
When trading currencies, you are not just trading one product, you are trading two currencies against each other.
The ratio of the two
is the so-called currency pair .
The quote for a
currency pair refers to the cost of exchanging one currency for another.
For example, if the pound is trading at $1.20, that means $1.20 can buy one pound.
To calculate how many pounds it takes to buy one dollar, take the reciprocal:
1 / 1.20 = 0.833
So 0.833 pounds, or 83.3 pence , buys one dollar.
If you want to learn more foreign exchange trading knowledge, please click: Trading Education.
