The first thing you should know for correctly reading currency quotes is that each world currency is given a three letter code which is used in Forex quotes. The most common currencies for traders are: European Euros (EUR), US Dollars (USD), United Kingdom Pounds (GBP), Australian Dollars (AUD), Japanese Yen (JPY), Swiss Francs (CHF) and Canadian Dollars (CAD).

Other important things to learn, is that the foreign exchange prices when trading Forex are indicated by quotes in a fraction like mode, called currency pairs. The first currency is called the 'base' and the second is called the 'quote' currency. In the following example: EUR/USD = 1.3200

This currency pair is formed by European Euros and US Dollars. The base currency (EUR) is always considered ‘1’ and the quote currency shows how much it costs to buy one unit of the base currency. In this example, 1 European euro costs 1.32 US dollars.

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