How do I read an exchange rate?

 

There are two types of quotes:

Two types of quotes

Direct quote: The price of the base currency in terms of the quote currency (e.g. in Japan, a direct quote for the USD would be 100.28 JPY = USD 1)

Indirect quote: The price of the quote currency in terms of the base currency (e.g. in the EU, an indirect quote for the USD would be USD 1.33 = 1 EU)

pair can be a direct quote or indirect quote

Regardless of whether the pair is a direct quote or indirect quote, the currency pair always has a bid price and ask price. The bid price is price at which the trader sells the currency and either initiates a short (sell) trade or closes a long (buy) trade. The ask price is price at which the trader buys the currency and either initiates a long (buy) trade or closes a short (sell) trade.

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