Cross Rate with Ask and Bid ask, something, quotes, cross, Cross

lxwarr30

When calculating cross rates when given bid-ask quotes, do we take the mid-point of each of the two bid-ask quotes to derive the third? Or do we do something fancy that involves up the bid and down the ask?

cv4cfa

I think people overcomplicate this issue with regards to learning formulas and tricks, where all thats required is developing some good intuition. All you really need to do is understand what the Quote is saying.

The quote USD/GBP at 1.6 1.7 is saying that if you need to convert GBP to USD, the broker will give you 1.6 USD, but will charge you 1.7 USD.

Use the less favourable everytime

torontoanalyst

amresmadi Wrote:
-------------------------------------------------------
> but we need the mid not the bid ?


When you calculate forward rate, you use midpoint for bid-ask .. however when calculating bid and ask, you dont use any midpoints.

chandsingh

gmakri sounds right to me ab bid divided by ac ask to get a cb bid

Walex

mfbarbmff Wrote:
-------------------------------------------------------
> When calculating cross rates when given bid-ask
> quotes, do we take the mid-point of each of the
> two bid-ask quotes to derive the third? Or do we
> do something fancy that involves up the bid and
> down the ask?


you have do fancy stuff buddy. sorry !

iteracom

Ab x bc= ac

Ab/ac=cb

If you are given bid ask

Ab bid x bc bid= ac bid and vice versatile

Ab bid/ ac ask= cb bid and vice versa