What Is a Quotation?
A quotation is the process of providing a price quote for a product. In financial markets, a quotation typically includes both a bid price, the price at which you can sell, and an ask price, the price at which you can buy, giving a complete picture of where a market currently stands.
How Quotations Are Displayed
The format of a quotation varies by market. In forex, a quotation is shown as a currency pair with bid and ask prices either side, while shares are typically quoted as a single last-traded price alongside a separate bid-ask spread. Commodities and indices often follow a similar bid-ask convention to forex.
Who Provides Quotations in the Market
Quotations can come from market makers, who set their own bid and ask prices and take the other side of client trades, or from exchanges that aggregate orders from multiple participants into a single quoted price. The source of a quotation can influence how tight or wide the bid-ask spread tends to be.
Two-Way vs One-Way Quotations
Most trading quotations are two-way, showing both a bid and an ask price simultaneously, which lets you see the cost of entering and exiting a position at a glance. Some less liquid markets or specific products may instead show a one-way quotation, reflecting only the price at which a transaction is currently possible in one direction, which can signal thinner liquidity in that particular product.
A Quotation Can Move Before You Trade: What to Keep in Mind
As a precaution, a quotation reflects market conditions at a specific moment and can change quickly, particularly around news events or in less liquid markets where fewer participants are actively quoting. The price you see isn’t always guaranteed until your order is actually executed, which is why checking execution details matters.
Reading Quotations With Confidence
A quotation is the most basic building block of any trade, providing the reference point from which every buy and sell decision is made across every market. Understanding how it’s built, and who provides it, helps put every price you see on a trading screen into proper context before placing an order.
⚠ Risk Warning:CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. Ensure you fully understand how CFDs work and whether you can afford to take the high risk of losing your money.
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