Understanding Currency Quotes

Here, we look at how online brokerages display currency
prices and what they mean for trade and order execution.
Keep in mind that different online forex brokers use different
formats to display prices on their trading platforms.

Bids and offers

When you’re in front of your screen and looking at an online
forex broker’s trading platform, you’ll see two prices for each
currency pair. The price on the left-hand side is called the bid
and the price on the right-hand side is called the offer (some
call this the ask). The “bid” is the price at which you can sell
the base currency. The “offer” is the price at which you can
buy the base currency.
Some brokers display the prices above and below each other,
with the bid on the bottom and the offer on top. The easy way
to tell the difference is that the bid price is always lower than
the offer price.
The price quotation of each bid and offer you see will have two
components: the big figure and the dealing price. The big figure
refers to the first three digits of the overall currency rate and
is usually shown in a smaller font size or even in shadow. The
dealing price refers to the last two digits of the overall cur-
rency price and is brightly displayed in a larger font size.

For example, in Figure below the full EUR/USD price quotation is
1.3493/95. The 1.34 is the big figure and is there to show you
the full price level (or big figure) that the market is currently
trading at. The 93/95 portion of the price is the bid/offer deal-
ing price.

Figure: dealing box from the FOREX.com trading platform for EUR/USD

shows the current bid and offer price. The “bid” (on the left) is the price at

which you can sell Euros. The “offer” on the right, is the price at which you

can buy Euros.

Spreads

A spread is the difference between the bid price and the offer

price. Most online forex brokers utilize spread-based trading

platforms for individual traders. Look at the spread as the

compensation the broker receives for being the market-maker

and executing your trade.

Spreads vary from broker to broker and by currency pairs at

each broker as well. Generally, the more liquid the currency

pair, the narrower the spread; the less liquid the currency

pair, the wider the spread. This is especially the case for some

of the less-traded crosses.