Ratio

Peg Ratio: Understanding Forex Trading Dynamics

4 min read

trading

The price-earnings to growth ratio, commonly referred to as the PEG ratio, is a common financial ratio used by forex traders when analyzing stocks in the forex market. The PEG ratio provides an estimate of the stock’s value-versus-growth ratio and compares the stock’s price-to-earnings (P/E) ratio to its projected earnings growth rate. This allows traders to determine if a stock is overvalued, undervalued or fairly priced based on its expected earnings growth. The lower the PEG ratio, the more value of a stock when compared to its growth.

Ratio

PEG Ratio Formula: What to Know for Forex Trading

4 min read

The Price Earnings to Growth Ratio (PEG Ratio) is a useful tool for traders and investors when looking at the fundamental valuations of any market or security, especially in the Forex market. It is calculated by dividing the market price of a currency’s stock by its expected earnings growth rate over a specified period. The PEG ratio is often considered to be the ‘golden cross’ of value stocks, as it is believed to provide a more accurate representation of a firm’s future potential than other value indicators. By comparing the PEG ratio of different currencies, traders can get an insight into how the currency is likely to perform in the future, relative to its peers.