FX Forwards and Market Quotes · Forwards Trading Guide

The correct side of a forward quote depends on what the customer buys or sells. A mid rate is a reference, not a guaranteed execution price.

Read the quote from the dealer’s perspective

Assume a dealer quotes EUR/USD forward at 1.1010 bid and 1.1020 ask. The dealer buys euros at the bid and sells euros at the ask. A customer buying EUR pays 1.1020 dollars per euro. A customer selling EUR receives 1.1010. Describing the trade only as buying dollars can obscure which leg is being quoted, so write both currency directions.

Calculate an actual cash comparison

A customer buying EUR 250,000 pays $275,500 at the ask. Selling the same amount simultaneously would receive $275,250 at the bid. The $250 difference illustrates the quoted spread for this size before any other charges. The midpoint of 1.1015 sits between those prices but does not mean the customer can buy and sell there.

Do not splice incompatible prices

Compare dealer quotes for identical notional, value date, settlement method, collateral terms and timestamp. A better headline rate may come with a different delivery window or an additional fee. A quote for a small indicative amount may not apply to a larger transaction. If requesting firm quotes, confirm how long each remains valid and whether acceptance creates an immediate obligation.

Keep the decision auditable

Record the competing quotes, final amount, all explicit charges and the accepted side. Distinguish indicative screens, executable offers and completed trades. For a sale, a higher comparable bid is better. For a purchase, a lower comparable ask is better. Execution quality should be assessed against a contemporaneous and relevant benchmark, not a price observed after the market has moved.

Try it yourself

A GBP/USD forward quote is 1.2670 bid and 1.2680 ask. An exporter sells GBP 120,000. Which rate applies and how many dollars does it receive?

Show the worked answer

The exporter sells pounds at the dealer’s bid of 1.2670 and receives $152,040 before other charges.

Further reading

Educational material. Numerical examples are hypothetical and exclude costs unless stated. Forward contracts create binding obligations and may require collateral or credit approval. Actual terms, access and risks depend on the agreement and jurisdiction.

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