Which statement correctly describes how the bid and ask are chosen for FX quotes in a buy or sell?

Which statement correctly describes how the bid and ask are chosen for FX quotes in a buy or sell?

• A. Buy uses the higher price; Sell uses the lower price
• B. Buy uses the lower price; Sell uses the higher price
• C. Buy uses the middle price; Sell uses either price
• D. Buy and sell both use the same price

Answer: (A)

In FX, the price you pay to buy the base currency is the higher quote, and the price you receive when you sell the base currency is the lower quote. So a buy order is filled at the ask (the higher price) and a sell order is filled at the bid (the lower price). The spread between these two prices represents the dealer’s earning margin and the cost of the transaction. For example, if EUR/USD is quoted as 1.1020/1.1023, buying EUR costs 1.1023 USD per EUR while selling EUR yields 1.1020 USD per EUR.

In FX, the price you pay to buy the base currency is the higher quote, and the price you receive when you sell the base currency is the lower quote. So a buy order is filled at the ask (the higher price) and a sell order is filled at the bid (the lower price). The spread between these two prices represents the dealer’s earning margin and the cost of the transaction. For example, if EUR/USD is quoted as 1.1020/1.1023, buying EUR costs 1.1023 USD per EUR while selling EUR yields 1.1020 USD per EUR.