Mechanics of the FX Market Trading in FX is dominated by banks, central banks, and multinational corporations (MNCs). The FX market is a quote-driven market Competition between dealers helps keep the bid-ask spread low FX quotations are either direct (American quote) or indirect (European quote) A direct FX quote is the price of a foreign currency in terms of units of a domestic currency, i.e. domestic currency price of one unit of the foreign currency. An indirect FX quote is the price of one unit of domestic currency in terms of units of a foreign currency, i.e. how many foreign currency units buy one unit of the domestic currency. Quotations in the spot FX market are expressed as full quotes (as prices) but quotations in the forward FX market maybe either full quotes orb point quotes (i.e. premium or discount from the full spot quote. FX quotes are by standard expressed correct to 4 decimal places Each point is equivalent to 1/10000 of a currency unit, e.g. USD 1=10000 points
