Concept question

Can anyone help me with this example?

For example, in the quote
USD/CHF 1.0227/32, the ask price is 1.0232; meaning you can buy one
US dollar for 1.0232 Swiss Francs.

what does “1.0227/32” mean and how does it get to be “1.0232”?

Thank you very much in advance.

It means that you can buy $1 for CHF1.0232 (exactly as you rightly said, above) and/or that you can sell $1 for CHF1.0227.

The [I]precise[/I] answer depends on what sort of broker you’re using (i.e. whether they’re a counterparty market-maker or a genuine broker), but if you’re asking about the exact [I][U]mechanism[/U][/I] of what determines the current ask price, I’ve tried to explain it in simple, straightforward terms here (using “bricks” as an analogy for “lots” of currency). Whether it will help, or not, I’m not sure, but it’s probably the best I can offer, from the “mechanical” perspective … :33:

Any pair is presented as XXX/YYY where XXX - “good”, YYY - money you pay per 1 unit of the good.
GBPUSD - 1.20 means you pay for 1 British Pound 1.20 US Dollar.

In forex trading you end “enemy” is “liquidity provider” which offers you [U]instant[/U] opportunity to play the game. For this convenience (instant buy and instant sell) it charges you spread - the difference between bid and ask price. In advanced interpretation, spread is an indicator of current market risk (as in case of uncertainty LP would raise its costs for playing the game to cover its potential risk from the fluctuation). You always buy at [B]higher [/B]price and sell at [B]lower [/B]price (alas the game is not free). Ask - the price that asks seller, bid - the price that sellers set.
F

thank you very much to both of you! :slight_smile: