Understanding Forex Quotes – DCE Currency Converter

At first blush, foreign currency exchange quotes may seem rather confusing. But the process has been simplified with quality online tools such as the DCE currency converter.

But at the end of the day, you only have to remember two things. One, the first currency listed is the "base" currency; two, the base currency’s value is always 1.

The base currency for most forex currency quotes is the US dollar, generally considered the cornerstone of the forex market. For this reason, the US dollar is prominently displayed on the DCE currency converter.

Other important foreign currencies on the DCE currency converter include the British Pound, Japanese Yen, the Euro, Swiss franc, Canadian Dollar and the Australian dollar. Collectively, these foreign currencies are known as "the majors" and constitute roughly 80% of all trades.

The DCE currency converter: covering all bases – and all foreign currencies

But the DCE currency converter doesn’t just display the majors. Imagine the most obscure foreign currency you can, and you’ll find it on the DCE currency converter.

Forex quotes are usually expressed as the unit of US $1.0000 per the second currency quoted on the DCE currency converter. As an example, a quotation of USD/CAD 1.1600 means one US dollar is the equivalent of 1.1600 Canadian dollars.

If the US dollar is the base pair in a DCE currency converter quote, and the currency quote rises, that means the US dollar has gained in value in relation to the other currency. So if the above USD/CAD DCE currency converter example changed to 1.1800, that would mean the US dollar have increased in value: each US dollar will now buy more Canadian dollars. It’s very easy to keep track of these trends by referring frequently to the DCE currency converter.

Three common exceptions to the above rule relate to the Euro, Australian dollar and the British pound, of which are easily entered into the DCE currency converter. With these foreign currencies, you could see a quote like GBP/USD 1.7200. Obviously, this means one British pound will buy 1.7200 US dollars. Since the US dollar isn’t the base currency, a higher number means a weakening US dollar.

Relative currency strengths on the DCE currency converter

In simple terms, where a foreign currency quote on the DCE currency converter rises, the value of the base currency has increased at the expense of the other currency.

Naturally, the US dollar is not involved in all DCE currency converter transactions. Foreign currency pairs not involving the US dollar are known as "cross currencies", and are eaily called up on the DCE currency converter. The same concept applies, however. For instance, an DCE currency converter quotation of GBP/CAD 2.1000 means that one British pound will buy 2.1000 Canadian dollars.

When trading in the forex market, you’ll frequently see a two-pronged quotation. These are known as the Bid and Ask prices. The Ask price is what you’d have to pay for the currency when selling the counter currency. The Bid price is what you can sell the base currency for, when buying the counter currency.