The Foreign Exchange Market (Forex) is decentralized. There is no single large market, there is no huge crowd of all market participants. Some of them form exchange structures (such as ESN) with their own set of currency pairs and rules.

From a practical trader point of view, the choice of currency pairs traded depends on the broker or ECN. But regardless of the offer, each pair consists of two currencies and has an offer. Let’s work out together what a quote in the Forex market is and how to read it.

Definition

In any currency pair in the Forex market, the base currency is the currency that comes first. The term “quote” is the currency in the currency pair that is the second. Thus, in the EUR-USD pair, the euro acts as the base currency, and the US dollar acts as the quotation currency.

Currency pairs are divided into two types: direct and indirect. The national currency is the base currency and the foreign currency is the quotation currency. In the direct form of an indirect offer, the opposite is true: the foreign currency is the base currency and the national currency is the quotation currency.

Bilateral quotes

On the interbank market, foreign exchange prices are always indicated by a two-way price. In a two-way quotation, the prices quoted for the purchase are called the offer price, and the sale price is the offer price or the sale price. Please note that these prices are always in terms of market maker and not from the point of view of a price maker. The price specified by the market maker is valid for a certain number of currency pairs and is subject to change if the amount for which the offer is requested is higher.

What is a quote in the forex market

What is a “hard quote” and “instant execution” in forex market

Now that you know what a quote is, let’s explain the moments with execution. The term “hard quote” means that the offer you provide electronically or orally will be the price at which the transaction will be executed after delivery after the instructions for its execution have been issued. There will be a narrow time interval during which the statement will be issued to execute, usually a few seconds. The term “hard quote” is contrary to the “indicative amount” when the broker indicates the current market price, but does not guarantee that the trade will be executed at a certain offer price when the order is placed on the market.

“Immediate performance” means that the contractor who provided the offer is ready to enter into a contract with you. In other words, from your point of view, the transaction will be executed and confirmed at the time of providing the information; it will not be queued on the market, waiting for execution when a contractor is found.

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