Market Conventions
Market conventions are rules and standards imposed by a governing body.In case of decentralized forex market these conventions might differdue to many national regulators (FSA, FSC, CFTC, NFA, BCSC, etc.).Since there is no central governing body that sets forex market rulesand standards, we will reference only these that are universal.
Quoting Conventions
The first currency in the pair isreferred to as the base currency, and the second currency is thecounter or quote currency. The U.S Dollar is usually the base currencyfor quotes, and includes USD/JPY, USD/CHF, and USD/CAD. The exceptionsare the Euro (EUR), Great Britain Pound (GBP), and Australian Dollar(AUD). As with all financial products, forex quotes include a "bid" and"ask", which is more often called "offer" in the forex market. The bidis the price at which a forex market maker is willing to buy (and youcan sell) the base currency in exchange for the counter currency. Theoffer is the price at which a forex market maker will sell (and you canbuy) the base currency in exchange for the counter currency. Thedifference between the bid and the offer price is referred to as thespread.