As foreign-exchange trading has no organized market where dealers are in personal contact with one another, prices are not exactly uniform, and so there are several kinds of quotations. As in any market, there is always a "bid" price at which the prospective purchaser offers to buy, and an "asked" price at which the seller is satisfied to make the sale. In foreign exchange, the former price is known as the bank's buying rate, and the latter as the selling rate. Between these two rates there is a difference or "spread" which represents the bank's profits. Actually the bank does not quote the same buying or selling rate to all customers, for these quotations will differ according to the value of the account to the bank and the size of the transaction. The "market" quotation, which approaches closely the actual daily buying or selling rate, is given by the bank to large commercial houses only for wholesale orders for exchange. For smaller or retail transactions involving the remitting of funds by individuals, the bank's quotations are naturally higher. All these quotations represent actual offers on the part of the bank to buy or sell exchange, and so are called "firm" rates. Banks also issue "service" rates to their customers as a matter of market information, but not as a real offer or a bid for exchange.

The rates presented on page 263 are quoted by the direct method, which states the number of home units payable for one foreign unit. Thus $3.65 is the equivalent of one pound sterling. Foreign-exchange rates may also be quoted indirectly, and in this case the value of one home unit is expressed in terms of the number of foreign units which it commands. Before 1914, one dollar was the equivalent of 5.18 francs. For many years both methods of quoting rates were employed in the foreign-exchange markets, but in order to avoid confusion the dealers of the New York market in 1921 agreed to use only direct quotations, and thus all rates for foreign currencies are quoted in dollars or in cents.