pe Ratio Formula for Forex Trading: An Academic Guide

The Price-Earnings Ratio (P/E Ratio) Formula is an important concept in the world of Forex trading and it can be used when analyzing the performance of a currency pair. The P/E Ratio is a financial ratio that measures the value of the current price of a currency pair relative to the amount of profit per share earned by the underlying company. The ratio is calculated by dividing the price of the currency pair (in terms of its base currency) by the reported or estimated earnings per share of the underlying company. Knowing the P/E Ratio can be important when trying to determine the potential of a currency pair’s future performance.