Direct and Indirect Quotes

In a trading terminal, we often come across both direct and indirect quotes — for example, EUR/USD and USD/CHF. In the first case, the U.S. dollar functions as the quoted currency, while in the second case, it serves as the base currency.

But what exactly is the difference between these two types of quotes, and why is it important for traders? This is what we will examine in this article.

Contents:

On Forex, there are three types of quotes: direct, indirect, and cross rates. Let’s dive into each one in detail.

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Direct Quotes

What does it mean? In direct quotes, the U.S. dollar is always the base (first) currency.

For example, in USD/CHF, the first (base) currency is the U.S. dollar, while the second (quoted) currency is the Swiss franc.

A direct quote shows how many units of the quoted currency are contained in one unit of the base currency. Essentially, the U.S. dollar acts as the "commodity" being traded — bought or sold — and the second currency represents the money used to purchase or sell the base currency.

Examples of direct quotes:

Indirect Quotes

In an indirect quote, the base (first) currency is the national currency — such as EUR, GBP, AUD, or NZD — while the quoted (second) currency is the U.S. dollar. The quote shows how many U.S. dollars are needed to buy one unit of the base currency.

For example, EUR/USD 1.18645 is an indirect quote. It indicates that 1 euro can be purchased for 1.18645 U.S. dollars.

Examples of pairs with indirect quotes:

How to Convert an Indirect Quote into a Direct Quote (and Vice Versa)

To convert an indirect quote into a direct one, you only need to perform a simple mathematical operation — divide 1 by the indirect quote.

Example: GBP/USD 1.33635. This means that to buy 1 British pound, you need 1.33635 U.S. dollars. If we want to know how many pounds are required to buy 1 dollar, we need to convert the indirect quote GBP/USD into the direct quote USD/GBP.

We divide 1 by 1.33635 and get 0.74830. This shows that 1 U.S. dollar can be exchanged for 0.74830 pounds (USD/GBP 0.74830).

If we need to do the opposite — convert a direct quote into an indirect one — the same rule applies: divide 1 by the direct quote.

Example: USD/CAD 1.30494. This means that to buy 1 U.S. dollar, you need 1.30494 Canadian dollars. To calculate how many U.S. dollars are required to buy 1 Canadian dollar, we convert the direct quote into an indirect one.

We divide 1 by 1.30494 and get 0.76631 (CAD/USD 0.76631).

Cross Rates

What is a cross rate? Put simply, it is the exchange rate between two currencies in a pair without the U.S. dollar being involved.

Examples of cross rates:

However, things are not always as straightforward as they may seem. Cross rates are still calculated through the U.S. dollar (with the exception of EUR/GBP), which means a double conversion takes place.

To make it clearer, let’s see how the cross rate for EUR/CAD is calculated. It is derived from two pairs: EUR/USD and USD/CAD, using multiplication or division depending on whether the pairs are quoted directly or indirectly.

Another example with EUR/NZD:

Comments

Hao
Hao 2025-09-12 03:26:10 #
Ask two traders what direct and indirect quotes are, and you’ll likely get two different answers! Simply put, a direct quote is when you are buying the dollar (the $ comes first in the pair), an indirect quote is when you are paying with the dollar (the $ comes second), and any pair that doesn’t include the dollar is a cross rate. Basically, that’s exactly what this article explains.
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