How do you read a forex quote like EUR/USD 1.1050? Explain it the way you would to a friend

A forex quote looks simple until you have to use it. Take EUR/USD at 1.1050. The first currency, the euro, is the base, and the second, the US dollar, is the quote. The price says that one euro costs 1.1050 US dollars. It follows that 100,000 euros, a standard lot, would cost $110,500 at that price.

A pip is the usual unit for measuring a move. For most pairs it is 0.0001, so a move from 1.1050 to 1.1060 is 10 pips. For a standard lot of EUR/USD, where the dollar is the quote currency, each pip is worth $10, so 10 pips is $100. For pairs involving the yen, such as USD/JPY, a pip is normally 0.01 instead. Base and quote currency explains how to go long or short, and lot sizes explained covers standard, mini and micro lots.

There is one more thing to keep in mind: you rarely trade at a single price. Brokers show a bid, the price you can sell at, and a higher ask, the price you can buy at. The difference is the spread, which is a cost (the real cost of a forex trade).

We would like to build the friendliest explanation in the community, so here are some prompts:

• How would you explain a quote like 1.1050 to someone who has never traded?
• What confused you most when you started: base and quote, pips, or lot sizes?
• What is the mistake you see beginners make most often when reading a price?
• Is there a comparison, such as exchanging money for a holiday, that helped it click?

Please keep replies friendly and practical. Posts that promise a direction or sell signals will be removed.