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Level 1 - Book 1 - Chapter 5

Reading Forex Quotes

Learn how to read currency prices, understand base and quote currencies, interpret bid and ask prices, and confidently read every forex quote before placing a trade.

Estimated Reading Time: 10 - 12 Minutes

Back to Book 1 Overview

Introduction

Every forex trade begins with reading a price quote.

If you cannot read a forex quote correctly, you cannot trade successfully.

Fortunately, forex quotes are very simple once you understand what each number means.

In this chapter, you will learn:

How to read a forex quote
Base Currency vs Quote Currency
Bid Price
Ask Price
Spread
Why prices constantly change

By the end of this chapter, you’ll be able to read any forex quote like a professional trader.

What is a Forex Quote?

A forex quote tells you how much one currency is worth compared to another.

Example:

EUR/USD = 1.1750

This means:

1 Euro = 1.1750 US Dollars

You are always comparing two currencies.

Understanding Currency Pairs

Every forex pair contains:

Base Currency
Quote Currency

Example:

GBP/USD

Currency	Meaning
GBP	Base Currency
USD	Quote Currency

This means:

1 British Pound equals X US Dollars.

Example 1

EUR/USD = 1.1800

Meaning

1 Euro = 1.18 US Dollars

If the quote changes to

1.1900

The Euro has strengthened.

Example 2

USD/JPY = 150.25

Meaning

1 US Dollar = 150.25 Japebese Yen

If USD/JPY rises

The US Dollar becomes stringer against the Japenses Yen.

Example 3

AUD/USD = 0.6550

Meaning

1 Australian Dollar = 0.6550 US Dollars

If it rises to

0.6700

The Australian Dollar has gained calue.

Why Prices Move

Forex prices move because buyers and sellers continuously trade currencies.

Prices are influenced by:

Interest rate decisions
Economic reports
Inflation
Employment data
Political events
Central bank announcements
Market sentiment

These factors constantly change supply and demand.

Understanding Bid Price

The Bid Price is the highest price that buyers are currently willing to pay.

Example:

EUR/USD

Bid

1.1750

If you want to sell EUR/USD,

you will sell at:

1.1750

Understanding Ask Price

The Ask Price is the lowest price sellers are willing to accept.

Example

Ask

1.1752

If you want to buy EUR/USD,

you buy at:

1.1752

Understanding the Spread

The difference between Bid and Ask is called the Spread.

Example

Bid

1.1750

Ask

1.1752

Spread

0.0002 = 2 pips

The spread is effectively the transaction cost charged by the broker.

Why is There a Spread?

The spread exists because brokers need compensation for providing access to the market and liquidity.

Spreads are usually:

Smaller on major currency pairs
Larger during major news events
Wider when market liquidity is low

Choosing a broker with competitive spreads can help reduce trading costs over time.

Live Quote Example

Imagine your trading platform shows:

EUR/USD

Bid

1.18235

Ask

1.18247

This means:

Sell at 1.18235
Buy at 1.18247
Spread = 1.2 pips

Common Beginner Mistakes

❌ Thinking only one price exists

There are always two prices.

❌ Confusing Base and Quote Currency

Always read:

Base / Quote

Never the other way around.

❌ Ignoring the Spread

A trade starts with a small unrealized loss equal to the spread, so it should always be considered when planning entries and exits.

Practical Exercise

Read the following quotes and identify the base currency, quote currency, and what the price means.

Quote 1

EUR/USD = 1.1850

Quote 2

GBP/JPY = 198.40

Quote 3

USD/CAD = 1.3525

Try answering before checking the explanations in the next chapter.

Key Takeaways

✔ Every forex quote contains two currencies.

✔ The first currency is the Base Currency.

✔ The second currency is the Quote Currency.

✔ The Bid Price is where you sell.

✔ The Ask Price is where you buy.

✔ The Spread is the difference between Bid and Ask.

✔ Understanding forex quotes is a fundamental skill before placing any trade.

Frequently Asked Questions

1. What is the difference between the base currency and the quote currency?

The base currency is the first currency in the pair, while the quote currency is the second. The quote tells you how much of the second currency is needed to buy one unit of the first.

2. Why are there two prices shown on my trading platform?

Because every market has buyers and sellers. The Bid price is used for selling, and the Ask price is used for buying.

3. What is the spread?

The spread is the difference between the Bid and Ask prices. It represents the cost of entering a trade.

4. Why do forex quotes keep changing?

Quotes change continuously as traders buy and sell currencies based on economic news, market sentiment, and global events.

5. Do all currency pairs have the same spread?

No. Major currency pairs generally have lower spreads because they are more actively traded, while exotic pairs usually have wider spreads.

Continue Your Journey

Other Learning Lints:

Automation Insight

Professional trading systems never “guess” whether to buy or sell—they read the same Bid and Ask prices that you see on your trading platform.
Every Expert Advisor (EA), algorithmic trading strategy, and AI trading system relies on accurate market quotes to make decisions.