Below is a glossary of terms that are used in the online trading industry. Select the first letter of the word you are seeking from the list above to jump to the appropriate section of the glossary.
What is a quote/price quotation?
The quote, also referred to as the price quotation, is the indicative cost upon which the buyer and seller agree for a financial instrument. When trading forex and CFDs, there are two quotes – Buy (Ask) and Sell (Bid).
The Bid/Sell quote is the highest price that the broker is willing to sell an asset or security to the trader (or the trader to the broker), and the Buy/Ask quote is the lowest price that the trader is willing to buy it from the broker (or the broker from the trader). The Buy/Ask quote is higher than the Bid/Sell quote, and the difference between them is known as the spread.
How does quote/price quotation affect forex traders?
The quote, or price quotation is one of the foundations of a forex and CFD trader’s decisions as to when to open or close his positions. Because of the spread, traders understand that when opening a long position (buying) on an asset, the price must go up simply in order for them to break even. Alternately, opening a short (sell) position, means that before the trader breaks even, or – ideally – sees a profit, the asset price must drop to a certain level. As a result, knowing both the Bid and the Ask prices of an asset are a key part to investing wisely.