Hey guys,
In currency management introduction, it says below:
A quote of 0.9790/0.9810 CAD /USD has four interpretations:
Deliver more CAD can be phrased as:
- Buy 1.0000 USD and deliver (sell) 0.9810 CAD.
- Sell 0.9810 CAD and receive (buy) 1.0000 USD.
*I don’t understand the difference between these two
Receive less CAD can be phased as:
- Sell 1.0000 USD and receive (buy) 0.9790 CAD.
- Buy 0.9790 CAD and deliver (sell) 1.0000 USD.
*Same here, I don’t understand the difference between these two
Please help guys, thanks!
0.979 CAD per USD is the bid price – the dealer will buy USD at this price from you
0.981 CAD per USD is the ask price – the dealer will sell USD to you at this price to you.
There are no commissions in foreign exchange transactions , so dealers have to survive on the bid/adk spread which is 0.002 CAD per USD here
thanks! but what i dont get is:
what is the difference between:
also, what is the difference between:
The pairs look the same to me. What is the difference in interpretations?
according to the notes, these are four interpretations.
There is no difference in the outcome, only a differene from the point of view. The first one (buy 1.0000 USD and deliver 0.9810CAD) is the point of view of a trader willing to buy 1.000 USD, while the second one (Sell 0.9810 CAD and receive 1.0000 USD) is the point of view of someone willing to sell 0.981 CAD. The first one asks himself how much he has to pay for a dollar while the second one asks himself what he gets for 0.981 CAD.