Spot foreign exchange trading quotation

Quotation is the key and basis for both parties to reach a deal. In the foreign exchange market, the institution that provides the transaction price is usually called the offeror, and the foreign exchange bank generally plays this role. Accordingly, other foreign exchange banks, foreign exchange brokers, individuals and central banks that request quotations and trade at the exchange rate provided by quotations are called inquiry persons.

In spot foreign exchange transactions, foreign exchange banks follow certain conventions when quoting.

1. Bidirectional quotation

Before the foreign exchange transaction is concluded, the inquirer usually does not disclose his trading intention to the offeror, so the quoting bank must quote both the buying price and the selling price. The difference between the buying price and the selling price is called the price difference. The exchange rate is generally expressed by five significant figures, which consists of two parts: a large number and a decimal number. Large numbers are the basic part of the exchange rate, and decimals are the last two digits of the exchange rate. The minimum unit market of quotation is called the basis point.

For example, the spot foreign exchange quotation of a bank is: Euro/USD = 1.23651.2370, where1.23 is a large number, 65 and 70 are decimals, and the difference between 65 and 70 is 8 basis points.

2. Concise quotation

In the international foreign exchange market, foreign exchange traders are very busy, so they will try their best to simplify the quotation. When quoting through telecom, the quoting bank only quotes the last two digits of the exchange rate, and only when the transaction needs to be confirmed or the market changes drastically will the quoting bank quote in large quantities.

3. USD quotation

Generally speaking, the exchange rate of all currencies is against the US dollar. In the foreign exchange market, unless otherwise stipulated, the transaction price quoted by foreign exchange trading banks refers to the price of the quoted currency against the US dollar.

4. Direct quotation

The quoted exchange rate is diagonal, the currency on the left is the benchmark currency, and the currency on the right is the buying price currency.