Forex Quotes:

Forex Quotes:

All forex price quotes include the bid and the ask price. A bid is a price at which a market maker is willing to buy a currency (at which the trader is willing to sell), and an ask is a price at which a market maker is willing to sell a currency (at which the trader is willing to buy). When you trade, you simultaneously buy one currency and sell the another. The first currency unit in the pair is known as the base currency, and the second currency is the “counter” or “terms” currency. Some examples of forex quotes are shown on the right.

EUR/USD	1.2807	1.2810
USD/CHF	1.2236	1.2240
GBP/USD	1.8444	1.8448

The quote on the left-hand side is the bid, whereas the one on the right-hand side is the ask. As you can see, the ask is always higher than the bid, and the difference, which is called the spread, is where the market maker makes its money from.In the example of the EUR/USD quote above, the spread is 3 pips (One pip refers to a movement of one in the last decimal point in the currency pair). The spread should be considered as part of your transaction cost. It is recovered when your trade moves favourably by the spread amount. Based on the USD/CHF example quote above, you can sell US$1 for Sfr 1.2236 according to the bid price, or you can buy US$1 for Sfr 1.2240 according to the ask price. If you are buying USD/CHF to go long, you are buying US dollar, and are at the same time selling the Swiss Franc. If you are selling USD/CHF to go short, then you are selling US dollar, and at the same time buying the Swiss Franc.