Indirect Quote

  

Categories: Trading

"I heard Mary say that she heard that Sandy said that Adam said that he overheard Mikala say that she liked Austin." One kind of indirect quote.

Another kind involves foreign currency trading.

Prices in forex trading (forex meaning "foreign exchange") are given in currency pairs. Since there's no central world currency that can be used as an independent standard, all currency prices only exist as a transfer of one currency into another. Pounds into dollars. Yen into euros. Etc.

Any currency pair can be presented in two ways. You want to know the exchange rate of dollars to pounds. You can either say how many dollars it would take to buy a single pound, or you can say how many pounds it would take to buy a single dollar. The same information is given either way...the numbers (dollars-to-pounds vs. pounds-to-dollars) are just inverses of each other.

A direct quote is where the domestic currency is the base currency, meaning the currency that gets the "one" attached to it. If you're in the U.S., the direct quote would let you know how many pounds could get exchanged for one dollar.

The indirect quote is the inverse of that. The foreign currency (the pound in this case) becomes the base currency. The number given is how many dollars it would take to get a single pound.

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