Methodologies / fx-quote-cost
FX Spot Quote Analysis
Compares a dealer-quoted FX rate with a user-supplied reference rate for an explicit trade direction.
Formula
rate_difference = quoted − reference; pips = rate_difference / pip_size; monetary = ±rate_difference × amount_base (sign by side)
Assumptions
- Rates are quoted as units of quote currency per 1 unit of base currency.
- Reference rate is supplied by the user (no market-data feed in Phase 1).
- Pip size is 0.01 when either currency is JPY, otherwise 0.0001.
- Percentage difference is (quoted − reference) / reference.
Limitations
- Does not assess fairness of the reference.
- Fee handling is a simple quote-currency add-on; it is not converted into pips.