Reading Forex Quotes

A forex quote tells you the price of one currency in terms of another. Every quote actually has two prices: one to sell at and one to buy at. Learning to read them is the first practical skill every trader needs.

What a Quote Means

A quote always reads as 1 unit of the base currency = X units of the quote currency.

EUR/USD 1.0850 → 1 EUR = 1.0850 USD

Example

EUR/USD 1.0850   1 euro buys 1.0850 US dollars
GBP/USD 1.2700   1 pound buys 1.2700 US dollars
USD/JPY 150.00   1 US dollar buys 150 yen
USD/CAD 1.3600   1 US dollar buys 1.36 Canadian dollars

If EUR/USD goes up, the euro is getting stronger against the dollar. If it goes down, the euro is getting weaker.

Note: A rising USD/JPY means the dollar is strengthening, because USD is the base. Always ask "which currency is first?" before you decide what a move means.

Bid and Ask

On your platform, every pair shows two prices side by side:

Bid: the price the broker will buy the base currency from you. You sell at the bid.
Ask (or "offer"): the price the broker will sell the base currency to you. You buy at the ask.

The ask is always higher than the bid.

Example: A two-way quote

Pair	Bid (you sell)	Ask (you buy)
EUR/USD	1.0850	1.0852
GBP/USD	1.2700	1.2703
USD/JPY	150.00	150.02

Often written as 1.0850 / 1.0852 or shortened to 1.0850/52.

Tip: Remember it this way: the market always wins the small difference. You buy high (ask) and sell low (bid) every time you enter and exit at the same moment.

The Spread

The spread is the gap between the ask and the bid. It is the main cost of a trade and how many brokers earn money.

Spread (pips) = (Ask − Bid) ÷ Pip size

Example: Measuring spreads

EUR/USD  1.0852 − 1.0850 = 0.0002 → 0.0002 ÷ 0.0001 = 2 pips
GBP/USD  1.2703 − 1.2700 = 0.0003 → 3 pips
USD/JPY  150.02 − 150.00 = 0.02   → 0.02 ÷ 0.01   = 2 pips

With 5-digit pricing:
GBP/USD  1.27015 − 1.27003 = 0.00012 → 1.2 pips

Because you buy at the ask and value the trade at the bid, a new trade always starts slightly negative by the size of the spread.

Example: The cost of the spread

Buy 1 standard lot EUR/USD at the ask: 1.0852
Bid right now:                          1.0850
Open result: −2 pips × $10 per pip = −$20

Price rises. New quote: 1.0880 / 1.0882
Close (sell) at the bid: 1.0880
Result: 1.0880 − 1.0852 = 0.0028 = +28 pips = +$280

The market moved 30 pips (1.0850 → 1.0880 on the bid), but you made 28: the other 2 were the spread.

Warning: Charts on most platforms show bid prices. When you are short, your stop-loss closes the trade by buying, so it triggers on the ask. It can be hit even if the bid chart never touched that level, most often when spreads widen.

Fixed vs Variable Spreads

Fixed spread

Stays the same in normal conditions (e.g. always 2 pips).
Easy to plan costs.
Usually wider on average; the broker may still widen it or reject orders ("requotes") during big news.

Variable (floating) spread

Moves with market liquidity.
Can be very tight (0.0–0.5 pips on EUR/USD) in busy hours.
Can jump to 10+ pips around news releases, the daily rollover or holidays.

Pair type	Typical retail spread (busy hours)
Majors (EUR/USD, USD/JPY)	0.1–1.5 pips
Minors (EUR/GBP, GBP/JPY)	1–4 pips
Exotics (USD/TRY, USD/ZAR)	20–200+ pips

Note: These are rough ranges. Your broker's real spread depends on account type, time of day and market conditions. "Raw" ECN accounts show tiny spreads but charge a separate commission.

Direct vs Indirect Quotes

Whether a quote is "direct" or "indirect" depends on your home currency.

Direct quote: the price of one unit of a foreign currency in your home currency. For an American, EUR/USD 1.0850 is direct: "a euro costs $1.0850".
Indirect quote: how much foreign currency one unit of your home currency buys. For an American, USD/JPY 150.00 is indirect: "a dollar buys ¥150".

Example: Flipping a quote

To turn one into the other, divide 1 by the price.

EUR/USD = 1.0850
USD/EUR = 1 ÷ 1.0850 = 0.9217   (1 dollar buys about 0.92 euros)

USD/JPY = 150.00
JPY/USD = 1 ÷ 150.00 = 0.006667  (1 yen buys about 0.67 US cents)

Cross Rates

A cross rate is the price of a pair without the US dollar, worked out from two dollar pairs. Brokers do this for you, but knowing how helps you understand why crosses move.

Example: EUR/GBP from EUR/USD and GBP/USD

Both pairs have USD as the quote, so divide:

EUR/GBP = EUR/USD ÷ GBP/USD
        = 1.0850 ÷ 1.2700
        = 0.8543
1 euro buys about 0.8543 pounds.

Example: GBP/JPY from GBP/USD and USD/JPY

USD is the quote in one pair and the base in the other, so multiply:

GBP/JPY = GBP/USD × USD/JPY
        = 1.2700 × 150.00
        = 190.50

Tip: Write the pairs as fractions. EUR/USD × USD/JPY: the USD "cancels", leaving EUR/JPY. EUR/USD ÷ GBP/USD = EUR/USD × USD/GBP, leaving EUR/GBP.

Test Yourself With Exercises

EUR/USD is quoted 1.0850 / 1.0852. You want to buy. At what price?

1.0850 (the bid)
1.0852 (the ask)
1.0851 (the middle)

You always buy at the ask (the higher price) and sell at the bid.

USD/JPY is quoted 149.95 / 149.98. What is the spread?

0.3 pips
30 pips
3 pips
0.03 pips

149.98 − 149.95 = 0.03. For JPY pairs a pip is 0.01, so 0.03 ÷ 0.01 = 3 pips.

What does "GBP/USD 1.2700" mean?

1 British pound = 1.2700 US dollars
1 US dollar = 1.2700 British pounds
The spread is 1.27 pips

The quote always tells you how much of the quote currency (USD) one unit of the base (GBP) buys.

AUD/USD = 0.6600 and USD/JPY = 150.00. What is AUD/JPY?

227.27
150.66
0.0044
99.00

AUD/USD × USD/JPY = 0.6600 × 150.00 = 99.00. The USD cancels out.

Which statement about variable spreads is true?

They never change
They can widen sharply during news releases and quiet hours
They are always wider than fixed spreads

Variable spreads follow liquidity. They are often tight in busy hours but can widen a lot around news, rollover and holidays.