Currency Quote
Also called Forex quote, FX quote, Currency pair quote, Exchange rate quote
A currency quote is the price of one currency in terms of another. It is written as a pair, such as EUR/USD 1.1000, which means one unit of the first (base) currency costs 1.1000 units of the second (quote) currency.
Every price you trade in forex is a currency quote. If you read one the wrong way round, you can buy when you meant to sell. The quote also sets which currency your profit or loss is counted in, so it affects your risk sums before you place a trade.
Do not mix up a currency quote with the quote currency. The currency quote is the whole price, such as EUR/USD 1.1000. The quote currency is only the second currency in the pair, here the US dollar.
Reading a currency quote from left to right
Prices in this entry are round illustrative figures.
The picture below labels each part of EUR/USD 1.1000.
Here is the rule that prevents most misreads. If the number goes up, the base currency got stronger. If it goes down, the base currency got weaker. This holds for every pair, whichever currency is listed first.
A common slip is USD/JPY. When it rises from 150.00 to 151.00, the dollar strengthened and the yen weakened. A trader who expects "the yen gets stronger" should sell USD/JPY, not buy it.
You can turn a quote around by dividing 1 by the price. EUR/USD at 1.1000 is the same as USD/EUR at about 0.9091.
Why EUR/USD and never USD/EUR: the order of market quotes
The market lists each pair in a fixed order. This order comes from long-standing convention, not from which currency is bigger. The usual ranking is EUR first, then GBP, AUD and NZD, then USD, then CAD, CHF and JPY. The higher-ranked currency becomes the base. So the euro sits in front of the dollar in EUR/USD. The dollar comes second in GBP/USD, AUD/USD and NZD/USD, and first in USD/CAD, USD/CHF and USD/JPY. Brokers do not list the flipped versions, so you trade each pair the way the market quotes it. The ladder below shows how three common pairs are built from this ranking.
The decision rule: if you want to bet on currency X, find which side of the pair it sits on before you choose buy or sell. If you expect a stronger dollar, you buy USD/CAD but sell GBP/USD.
Direct and indirect quotes: it depends on your home currency
A direct quote prices one unit of a foreign currency in your own currency. An indirect quote prices one unit of your own currency in a foreign one. So the same pair can be direct for one trader and indirect for another.
| Pair | For a US trader | For a eurozone trader |
|---|---|---|
| EUR/USD | Direct: 1 euro priced in dollars | Indirect: 1 euro priced in dollars |
| USD/JPY | Indirect: 1 dollar priced in yen | Neither: the euro is not in the pair |
| EUR/JPY | Neither: the dollar is not in the pair | Indirect: 1 euro priced in yen |
The euro ranks first in the quote order, so a eurozone trader sees the euro quoted indirectly in every pair that contains it.
Bid and ask: the two prices inside a live quote
A tradable quote has two prices. The bid is the price you sell at. The ask is the higher price you buy at. A live quote might show EUR/USD 1.1000 / 1.1002. The levels below show those two prices with the gap between them shaded.
You open a buy trade at the ask and close it at the bid. A sell trade works the other way round. The price shown on a chart is usually the bid, so a buy fills at the ask, slightly above it. The gap between the two prices is a cost you pay on every trade. It has its own entry under bid-ask spread.
How the quote decides your profit on a trade
Your profit or loss is first counted in the quote currency. If you buy 10,000 EUR/USD (one mini lot) at the ask of 1.1002 and close at the bid of 1.1052, the price has moved 0.0050. A pip is the standard small step in a quote, 0.0001 on EUR/USD, so this is a 50-pip move. It pays 10,000 × 0.0050 = $50, because USD is the quote currency.
Now take USD/JPY. You buy 10,000 units at 150.00 and close at 150.50, ignoring the spread to keep the numbers simple. Yen is the quote currency, so the profit comes out in yen. If your account is in dollars, your platform converts it at the current rate. The calculation below shows both steps.
The decision rule: if the quote currency is not your account currency, the value of each pip also changes as that exchange rate moves. Work out your risk in money at today's rate, not at a rate you remember.
Checks before you trade from a quote
- Check which side of the pair your currency sits on. If it is the quote currency, your buy/sell choice flips.
- Count the decimals before you set a stop. With most brokers, most pairs show 5 decimals and yen pairs 3; the last digit is a fraction of a pip, called a pipette. A stop 20 pips away is 0.0020 on EUR/USD but 0.20 on USD/JPY.
- If the bid and ask on your platform are far apart or not updating, the quote may be stale. Wait for a live two-sided price.
FAQ
Why is my broker's quote different from the rate on a currency converter?
A converter usually shows a mid-rate between bid and ask, and it may be delayed. Your broker shows its own live bid and ask, built from its own price sources, so quotes can also differ slightly from one broker to another. Your own platform's quote is the only price you can trade at.
Why does the quote on my platform stop moving at the weekend?
The forex market closes for the weekend, so no new prices come in. Your platform keeps showing the last quote from the close. When the market reopens, the first new quote can be different from that last price, so the price can jump, which traders call a gap.