How To Read A Quote

Free Forex Charts - Currency Exchange Rates - Currency Converter

Welcome to our guide on how to read a currency exchange quote. Typically a quote is divided into two parts, the symbol and the price. Below you will find a description and an explanation covering each of these parts.

The Symbol
The symbol is the first part of every currency quote and it represents the currency pair or cross the price refers to. Using an example of Euro against the US Dollar the symbol will be listed as: EURUSD (the format used on this site) EUR USD, EUR/USD or EUR-USD. (Click here for an extensive list of 3-letter currency symbols). Notice that the quote is split into two halves; one half EUR and one half USD. The order in which the currencies are listed is also important i.e. the Euro is first and the US Dollar second. This order is important because each currency is assigned a title depending on its place in the quote symbol. The first currency is known as the base currency and the second can be called the quote, counter or term currency.

As you become used to the foreign exchange market you will notice that most data providers, brokers and websites only quote certain currency pairs and crosses in a set order. For example, the EUR and USD is only quoted EURUSD and not USDEUR and GBPUSD rather than USDGBP. This format is based on industry standard and is the order in which the major banks and liquidity providers do their business. Therefore, it is also the way the majority of online forex brokers list their quotes for you to trade. However, if you wish to make a physical money exchange transaction via an agent your domestic currency will be quoted first. For example, if you wish to exchange British Pounds for Euros, GBP will be the base currency (GBPEUR) even though EURGBP is the industry standard.

One of the major advantages of our Free Forex Charts and Currency Exchange Rates is that we provide you with both symbol variations whenever possible. This is because we understand that people looking to make physical money exchanges are just as interested in currency price movements as forex traders.

The Price
The second half of a currency quote is the price. It can be displayed in several ways depending on your data provider but most likely it will be one of the following: Separate prices under the headings Bid and Ask (or offer) just like you will see in the currency exchange rate tables on this website or one single number something like this: a)1.3400/02 or b)1.3400/3402. Both of these prices mean exactly the same thing the only difference is the amount of abbreviation for the ask price. When the price is listed like this the number to the left of the / is the Bid price and to the right is the Ask price, a.k.a. the offer. The difference between the two prices is knows as the spread.

Now let us combine the two halves of a currency quote, the symbol and the price.

EURUSD 1.3400/3402

Remember that the first currency listed in the symbol is the base currency. It is assumed that the base currency has a unit value of 1. So, 1 unit of EUR is equal to 1.3400/34002 units of USD or €1 = $1.3400/02.

Of course this quote is set up with the forex trader in mind. It is telling the trader that they can buy EURUSD for a price of 1.3402 or they can sell it at 1.3400. Unlike buying and shorting shares every time you trade a currency pair you are simultaneously buying one currency and selling another. Therefore, if you buy the EURUSD you are buying the Euro and selling the Dollar, or buying the Euro against the Dollar. The exact opposite is true if you were to sell the EURUSD.

If you wish to make a physical money exchange your agent will quote you one single price depending on the currency and the quantity you wish to purchase and which currency you will use to make the purchase. For example, if you wish to purchase €1 000 000 (1 million) with US Dollars your agent is likely to quote you $1.34 per Euro or $1 340 000 total. This figure will vary depending on the market value at the time, the agent fees and the size of the currency transaction in question.

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