Forex indirect quote definition

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The term indirect quote is a currency quotation in the foreign exchange market that expresses the variable amount of foreign currency required to buy or sell one unit of the domestic currency. In other words, the domestic currency is the base currency in an indirect quote, while the foreign currency is the counter currency. Key Takeaways An indirect quote in the foreign exchange markets expresses the amount of foreign currency required to buy or sell one unit of the domestic currency.

The opposite of an indirect quote is a direct quote which expresses the price of one unit of a foreign currency in terms of variable number of units of the domestic currency. As the U. Consider the example of the CAD, which we assume is trading at 1. Direct and indirect quotes are the inverse of each other, not exactly the same.

In summary: [[summary]] Incorrect. Although this value is in fact the inverse of 0. Because exchange rate quotations are just two sides of the same coin, direct and indirect quotations are just the inverse or reciprocal of each other. One of the most challenging concepts for exchange rates is how they are quoted. Keep in mind that exchange rates are for two currencies, which makes them like two sides of the same coin. Assume you are a U.

Direct and indirect quotations are the inverse of each other.

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What are Forex Quotations? As already mentioned above all of the countries have their own currencies with different values. In that case, the mentioned currency pair represents a direct quote. Furthermore, currency pairs and their value can be divided into three parts. Each of the parts has its own name. And the number 1. What is a Direct Quote?

For calculating the direct quote the main and basic formula is to divide number 1 to indirect quote. Direct quote in foreign exchange trading currency pairs represents the first symbol of the currency pair. All the currencies that are related to the former British empire are always quoted as a base currency.

There is no meaning whether the mentioned currencies are indirect or not, they are always listed at first, and in the list, they are represented as the base currency. What is an Indirect Quote? An indirect quote is the opposite of a direct quote. Each of the quotes, both direct and indirect quotes is one of the main elements in Forex trading.

Is the price of a currency pair expressed as amount of foreign currency per unit of domestic currency. In other words, when an indirect quote is given, the exchange rate is expressed relative to a fixed amount of the national currency 1 unit , while the amount of foreign currency is variable.

For example, if we are in the United States, the indirect quote for the Canadian dollar would be 1. If we were in Canada the indirect quotation of the US dollar would be 0. As we can see, in an indirect quote the base currency of the currency pair is the national currency. Unlike indirect quote, the directly quote expresses the amount of domestic currency per unit of foreign currency.